First, it was unsecured loans, then it was housing finance companies and in the last two days, it has been micro finance companies. RBI has been taking stock of each segment of the financial service and tightening the norms so that accidents like 2018 can be avoided. Whenever there is tightening of norms, stocks from that sector tend to correct. The question is whether that correction is something which is an opportunity or not. One part of the answer lies in looking at overall market size and the growth. In the case of the housing finance segment, there is hardly any doubt about growth potential. So, if the growth potential then corrections are opportunities. But that is for companies which are able to adapt to the changing regulatory provisions, they will stand to gain in the long term.
The RBI has proposed higher liquid assets for housing finance companies, smaller aggregate deposits, and the ability to issue co-branded credit cards in a draft circular on reviewing the regulatory framework for HFCs.
The Reserve Bank of India (RBI) has proposed a phased transition towards tighter regulations for housing finance companies (HFCs) to ensure they are treated equally with non-banking financial companies (NBFCs). The revised regulations will be effective immediately, unless specified otherwise.
The RBI bars regulated entities including banks, non-banking finance companies, and HFCs from investing in any scheme of AIFs that have downstream investments in a debtor company of the entity