Reserve Bank of India (RBI) issued Notification No. DOR.FIN.34/03.10.136/2024-25, revising the liquid asset requirements for housing finance institutions (HFIs) under Section 35B and Section 29B of the National Housing Bank Act, 1987. Effective January 1, 2025, HFIs accepting public deposits must invest in unencumbered approved securities amounting to at least 8% of public deposits. This threshold increases to 10% from July 1, 2025.
Additionally, HFIs must maintain deposits or subscribe to bonds issued by the National Housing Bank, or a combination thereof, to meet a total liquidity ratio of 14% starting January 1, 2025, and 15% from July 1, 2025. These requirements ensure enhanced financial stability and liquidity management.
The notification replaces the earlier directive issued by the National Housing Bank on May 25, 2019, and aligns the definition of “public deposit” with the Master Directions for Non-Banking Financial Companies–Housing Finance Companies, 2021. All other provisions of Section 29B remain applicable. The measures aim to strengthen the liquidity framework for housing finance institutions.
RESERVE BANK OF INDIA
(Department of Regulation)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 19th December, 2024
Maintenance of a minimum percentage of liquid assets
Notification No. DOR.FIN.34/03.10.136/2024-25.— In exercise of the powers conferred under Section 35B read with sub-sections (1) and (2) of Section 29B of the National Housing Bank Act, 1987 (53 of 1987) and in supersession of the Notification No. NHB.HFC.LA-2/MD&CEO/2019 dated 25th May 2019, previously issued by National Housing Bank, the Reserve Bank being satisfied that it is necessary so to do, hereby declares that the provisions of sub-sections (1) and (2) of Section 29B of the said Act shall not apply to housing finance institution which is a company, subject to, however that—
(A) Every housing finance institution which is a company, accepting public deposits shall
(1) invest and continue to invest in India in unencumbered approved securities, valued at a price not exceeding the
current market price of such securities, an amount which, at the close of business on any day, shall not be less than the following per cent of the public deposits outstanding at the close of business on the last working day of the second preceding quarter:
| (i) on and from January 01, 2025 | eight per cent |
| (ii) on and from July 01, 2025 | ten per cent |
(2) maintain in India in an account with any scheduled bank in term deposits or certificate of deposits (free of charge or lien) or in deposits with the National Housing Bank or by way of subscription to the bonds issued by the National Housing Bank, or partly in such an account or in such deposit or partly by way of such subscription, a sum which, at the close of business on any day, together with the investment made under clause (1), shall not be less than the following per cent of the public deposits outstanding at the close of business on the last working day of the second preceding quarter:
| (i) on and from January 01, 2025 | fourteen per cent |
| (ii) on and from July 01, 2025 | fifteen per cent |
(B) All other provisions of Section 29B shall mutatis mutandis be applicable to the above requirement as if the expression “public deposit” is the same as the expression “deposit” as contemplated under the said section.
Explanation:
“Public deposit” shall have the same meaning as assigned under paragraph 4.1.30 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, as amended from time to time.
J. P. SHARMA, Chief General Manager
[ADVT.-III/4/Exty./855/2024-25]
