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RBI has tightened norms for Housing Finance Companies (HFCs)

Published on August 14, 2024
Current context: The Reserve Bank of India (RBI) recently issued a notification on August 12, 2024, regarding the review of risk weights for Housing Finance Companies (HFCs).
RBI has tightened norms for Housing Finance Companies (HFCs)
  • Here are the key updates:
    • Risk Weighted Assets for Undisbursed Loans: To address anomalies in the computation of risk-weighted assets for undisbursed housing loans and other loans, the RBI has decided to cap the risk-weighted assets for undisbursed amounts at the level of equivalent disbursed loans.
    • Risk Weight for Commercial Real Estate - Residential Building: The risk weight for fund-based and non-fund-based exposures to ‘Commercial Real Estate - Residential Building’ classified as standard will be 75%. For non-standard exposures, the risk weight will be 100%.
  • These changes aim to ensure a more accurate and fair assessment of risk for HFCs, promoting stability in the housing finance sector.

Question:

1 What is the new risk weight for standard commercial real estate - residential building exposures for Housing Finance Companies (HFCs)?

  • A) 75%
  • B) 100%
  • C) 50%
  • D) No change
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