Restriction on Acceptance of Deposits

deposits

No housing finance company shall accept or renew public deposits unless the housing finance company has obtained minimum investment grade rating for its fixed deposits form any one of the approved rating agencies for Company Registration  at least once a year and a copy of the rating is sent to the National housing bank and it is complying with all the prudential norms, provided that:

  • A housing finance company having obtained credit rating for its fixed deposits not below the minimum investments grade rating as above and complying with all the prudential norms, may accept public deposits not exceeding five times of its NOF.
  • A housing finance company which does not have the requisite rating for its fixed deposits shall be obtained the same within a period of six months’ time from the date of the notification or such extended period as may be permitted by the National Housing Bank, to obtain the prescribed rating for the fixed deposits.

Approved Credit Rating Agencies

  1. The names of approved credit rating agencies for the time being are as follows:-
  • The Credit Rating Information Services of India Ltd., (CRISIL)
  • ICRA Ltd.
  • Credit Analysis & Research Ltd.(CARE)
  • Fitch rating India private Ltd.
  1. No housing Finance company shall have deposits inclusive of public deposits, the aggregate amount of which together with the amounts, if any, held by it which are referred in clauses (3) to (7) of sub-section (b b) of section 45 (1) of the Reserve Bank of India, 1934 (2 of 1934) as also loans or others assistance from the National Housing Bank, is in excess of sixteen times of its NOF.
  2. Where a housing finance company holds as on the date of commencement of these directions public deposits in excess of the limits specified in (2) of above, it shall-
  • Not accept fresh deposit or open new deposit account ; or
  • Not renew the existing deposits or where the deposits received under any recurring scheme, receive installments under such schemes after the expiry if the scheme period;
  • Reduce such excess deposits by repayment on maturity.
  1. In the event of down graduation of the credit rating any level below investment grade, the housing finance company shall-
  • Report the position within 15 working days to National Housing Bank;
  • With immediate effect stop accepting fresh public deposits and
  • Reduce such excess deposit by repayment on maturity.

Period of Deposits

deposits

No housing finance company shall accept or renew any public deposit:

  • Which is repayable on demand or notice; or
  • Unless such deposit is repayable after a period of twelve months or more but not later than eighty four months from the date of acceptance or renewal of such company registration  deposits. Where a public deposit is in Installments, the period of such deposits shall be computed from the date of the receipt of first Installment.

Joint Deposits

Where so desired deposits may be accepted in joint names with or without any of the clauses namely, “Either or Survivors”, “Number of one or more survivors”, “Anyone or survivor/s”.

Particulars to be specified in application from soliciting public deposits

No housing finance company shall accept or renew any public deposits except on a written application from the depositors in the form to be supplied by the housing finance company, which form shall contain all the particulars specified in the Non-banking Financial Companies and Miscellaneous Non-Banking Companies  (Advertisement) Rules, 1977, made under section 58 A of the Companies Act, 1956 (1 of 1956) of company registration and also contains the particulars of the specific category of the depositors , whether the depositor is  a shareholder or  a director or a promoter of the housing finance company or a member of public or a relative of a directors of the company.

Introduction of Depositors

deposits

Every housing finance company shall obtain proper introduction of new depositors before opening their accounts and accepting the deposits, and shall keep on its record the evidence on which it has relied for the purpose of such introduction. For the purpose of this paragraph, introduction shall mean identification of the prospective depositors and may be done either by one of the existing depositors or on the basis of any one of the Income Tax Permanent Account Number (PAN), Election Identity Card, passport or ration card.

Furnishing of receipts to depositors

  • Every housing financing company shall furnish to every depositor or his agent, unless , it has done so already, a receipt for every amount which has been or which may be received by the housing finance company by way of deposit before or after the date of commencement of those directions.
  • The said receipt should be duly signed by an officer entitled to act for the housing finance company in this behalf and shall state the date of deposit, the name of the depositors, in amount in words an figures received by the housing finance company by way of deposit, rate of interest payable thereon and the date on which the deposit is repayable. If such receipts pertain to installments subsequent to the first installment of a recurring deposit it may contain only one of the depositors, date and amount of deposit.

Register of Deposits

Every housing finance company shall keep one or more registers in which shall be entered separately in the case of each depositor or group of joint depositors the following particulars namely,

  • Name and address of the depositor or group of joint depositors, their nominees.
  • Date and amount of each deposits,
  • Duration and due date of each deposits,
  • Date and amount of accursed interest or premium on each deposits.
  • Date and amount of each repayment , whether of principal , interest or premium,
  • Date of claim made by the depositor
  • The reasons for delay in repayment beyond five working days, and
  • Any other particulars relating to the deposits.

The register or registers aforesaid shall be kept at each branch in respect the deposits accounts open by that branch of the housing financial company and a consolidated register for all the branches taken together at the registered office of the housing finance company and shall be preserved in good order for the period of not less than eight years following the financial year in which the latest entry is made before the repayment or renewal of any deposit of which particulars are contained in the register of the company registration.

Information to be included in the Board’s report

deposits

In every report of the Board of Directors laid before the housing finance company in a general meeting under sub-section (1) of section 217 of the Companies Act, 1956 (1 of 1956) after  the date of commencement of these Directions there shall be included the following the particulars or information, namely:

  • Total number of accounts of public deposits of the housing finance company which have not been claimed by the depositors or not paid by the housing finance company after the date on which the deposits became due for re-payment and
  • The total amounts due under such accounts remaining unclaimed or unpaid beyond the dates referred to in clause (a) as aforesaid.

The said particulars or information shall be furnished with reference to the position as on the last date of the financial year to which the report relates and if the amounts remaining unclaimed or undisbursed as referred in clause(b) of the preceding sub-paragraph exceed in the aggregate the sum of rupees five lakhs, there shall also be included in the report a statement on the steps taken or proposed to be taken by the Board of Directors  for the repayment of the amounts due to the depositors or group of joint depositors and remaining unclaimed or undisbursed.

Ceiling on the rate of Interest and brokerage and interest on overdue public deposits

On and from 6th July .2007 no housing finance company shall invite or accept or renew any public deposits at a rate of interest exceeding twelve and half percent per annum such interest being payable or compounded at rests which should not be shorter than monthly rests. On and from 20th September, 2003, no housing finance company shall invite or accept or renew repairable deposits from non-resident Indians items of notification. No housing finance company shall pay to any broker on public interest deposits collected by or through him:

  • Brokerage, commission, incentive or any other benefit by whatever name called in excess of two percent of the deposit so collected;
  • Expenses by way of reimbursement on the basis or relative vouchers /bills produced by him, in excess of 0.5% of the deposits so collected.

Renewal of public deposit before maturity

Where any housing finance company permits an existing depositor to renew his public deposits before maturity for availing the benefit of higher rate of interest, such company registration shall pay the depositor shall increase in the rate of interest provided.

  • The public deposit is renewed in accordance with the other provisions of these directions and for a period longer than the remaining period of the original contract; and
  • The interest on the expired period of the public deposits is reduced by one percentage point from the rate at which the housing finance company would have ordinarily paid, had the deposits been accepted for the period for which such public deposit had run; any interest paid earlier in excess of such reduced rate is recovered/adjusted.

Safe custody of approved securities

deposits

Every housing finance company shall entrust to one of the scheduled commercial banks designed by it on that behalf, in the place where the registered office of the housing finance company is situated, the unencumbered approved securities required to be maintained by it in pursuance of Section 29 B of the National Housing Bank Act, 1987. Where a housing finance company intends to entrust these securities to the Stock holding corporation of India Ltd. Or to its designated bankers at a altered office is situated or to keep them in the form of constituent’s subsidiaries general Ledger Account with a schedule commercial bank, or which a depository participant registered with Securities and Exchange Board of India established under Securities and Exchange Board of India Act, 1992(15 of 1992), it shall obtain the prior approval in writing of the National Housing Bank.

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