ABC Housing Finance Ltd., a newly established company, intends to register as a Housing Finance Company (HFC) under the National Housing Bank Act, 1987. The company meets all the eligibility criteria for registration, ex

CS Executive · Setting Up of Business, Industrial and Labour Laws · PYQS · June 2025
ABC Housing Finance Ltd., a newly established company, intends to register as a Housing Finance Company (HFC) under the National Housing Bank Act, 1987. The company meets all the eligibility criteria for registration, except for the Net Owned Fund (NOF) requirement, as its current NOF is ₹18 crore, which is below the required threshold. Advise the company on the minimum NOF required for HFC registration and whether the company can seek an exemption from the National Housing Bank (NHB) regarding this requirement.

Answer & Explanation:

Minimum NOF Requirement for HFC Registration: As per the National Housing Bank (NHB) regulations, an entity seeking registration as an HFC must comply with the minimum Net Owned Fund (NOF) requirement. A Housing Finance Company (HFC) is required to maintain a minimum Net Owned Fund (NOF) of ₹20 crore (after RBI's Notification dated October 2021) to be eligible for registration. Since ABC Housing Finance Ltd. currently has an NOF of ₹18 crore, it does not fulfill the regulatory threshold of ₹20 crore and must infuse additional capital before applying for registration. Seeking Exemption from NHB: Under the existing regulatory framework, the National Housing Bank (NHB) does not grant any exemption or relaxation regarding the minimum NOF requirement.

Topics: Financial Regulations

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