RBI UNVEILS NORMS FOR MORTGAGE FIRMS

The Reserve Bank of India (RBI) unveiled draft guidelines for mortgage guarantee firm, stipulating minimum net owned funds of Rs.100 crore at the time of commencement of business, to be augmented to Rs.300 crore within three years from the date of commencement of business. RBI also stipulated that such companies maintain 12% of their aggregate risk weighted assets as the minimum capital adequacy ratio or any other percentage that may be prescribed by the RBI for the purpose, from time to time. A mortgage guarantee company will also have to maintain at least 8% of its aggregate risk weighted assets as Tier 1 capital. No single guarantee for a housing project can exceed 10% of the company’s Tier I and Tier II capital.