TITLE: India's Reserve Bank Amends Housing Finance Company Directions on Owned Fund Computation
BODY:
On March 10, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026, amending the Master Directions issued on November 28, 2025. The amendment provides clarification on the components included in the computation of Owned Fund for housing finance companies (HFCs).
The RBI, exercising powers under Sections 45L and 45MA of the Reserve Bank of India Act, 1934 and Sections 30, 30A, 32, and 33 of the National Housing Bank Act, 1987, modified Paragraph 10(16) of the Master Directions to redefine "Owned Fund." The updated definition includes paid-up equity capital, compulsorily convertible preference shares, free reserves including quarterly profits, share premium account balances, and capital reserves from asset sales, while excluding revaluation reserves. The computation reduces these amounts by accumulated losses, intangible asset book values, and deferred revenue expenditure.
The amendment introduces conditions for including quarterly profits in Owned Fund calculations. HFCs must subject financial statements to limited review or audit by statutory auditors on a quarterly basis. Quarterly profits are reduced by the average dividend paid over the preceding three years, calculated using a specified formula. Current year losses are fully deducted from Owned Fund. Additionally, HFCs are not required to deduct Right-of-Use (ROU) assets created under Indian Accounting Standard (Ind AS) 116-Leases from Owned Fund, provided the underlying leased asset is tangible.
The Amendment Directions came into force with immediate effect on March 10, 2026, and apply to all HFCs regulated by the RBI.