RBI committee suggests new govt sponsored intermediaries for HFCs

With an aim to improve mortgage-backed securitization, a five-member committee formed by the RBI has recently recommended the formation of a new government sponsored intermediary through the National Housing Bank (NHB) specifically for housing finance companies.

The committee has suggested development of an intermediary company with an initial capital of Rs 500 crore, in which the government will hold 51% stake, which will be gradually brought down to 26 per cent over five years.

“The intermediary would be allowed to invest in each pool it securitises to the extent of 5 per cent of the pool or 5 per cent of its own capital base, whichever is lower. An overall aggregate limit of 50 per cent capital of the intermediary can be set as the limit for market making activities,” the committee said in its 90 page report.