RBI/2007-2008/224
DNBS/PD(MGC)
C.C.111/ 03.11.001 /2007-08 January 15, 2008
Regulatory Framework for Mortgage Guarantee Company It
may be recalled that while announcing proposals for the Union budget 2007-08,
the Finance Minister of India announced: 'Our
people want housing loans. Banks and housing finance companies that lend against
mortgages would have greater comfort if the mortgage can be guaranteed through
a three way contract among borrower, lender and guarantor. Regulations will be
put in place to allow the creation of mortgage guarantee companies'. 2. Accordingly,
the Bank had drawn up a draft scheme for considering proposals from Mortgage Guarantee
Company for grant of Certificate of Registration. The draft scheme was discussed
with the stakeholders and after examination of comments/suggestions received in
this regard and with the previous approval of the Central Government, it has been
decided to specify Mortgage Guarantee Company as non-banking financial company
in terms of powers conferred upon the Bank under Section 45 I (f) (iii) of the
RBI Act, 1934. A Notification No. DNBS(MGC) 1/CGM (PK)- 2008 dated
January 15, 2008 is enclosed in this regard. Further, it has been decided
to exempt a Mortgage Guarantee Company from the provisions of Section 45-IA (requirement
of registration), Section 45-IB (maintenance of liquid assets) and Section 45-IC
(creation and transfer to Reserve Fund a certain percentage of the net profit)
of the RBI Act as a separate regulatory framework is being prescribed for such
companies. A Notification No.DNBS(MGC) 2/CGM (PK)- 2008 dated
January 15, 2008 in this regard is enclosed. Yours faithfully,
(P Krishnamurthy)
Chief General Manager In-charge
Reserve
Bank of India
Department of Non-Banking Supervision,
Central Office,
Centre
1, World Trade Centre,
Cuffe Parade, Colaba
Mumbai - 400 005 Notification
No. DNBS (MGC)1/CGM(PK) -2008 dated January 15, 2008 The
Reserve Bank of India, on being satisfied that it is necessary so to do, in exercise
of the powers conferred on it under Section 45 I (f)(iii) of the Reserve Bank
of India Act, 1934 (2 of 1934) (the Act), with the prior approval of the Central
Government hereby specifies that a Mortgage Guarantee Company, that is, a company
registered with the Bank under the scheme for registration of Mortgage Guarantee
Companies notified by the Bank in this regard, will be treated as Non-Banking
Financial Company under the provisions of the Act. (P. Krishnamurthy)
Chief
General Manager-in-Charge
Reserve Bank of India
Department
of Non-Banking Supervision,
Central Office,
Centre 1, World Trade Centre,
Cuffe
Parade, Colaba
Mumbai - 400 005 Notification No. DNBS
(MGC) 2 /CGM(PK) -2008 dated January 15, 2008 The Reserve Bank
of India, on being satisfied that it is necessary so to do, in exercise of the
powers conferred on it under Section 45NC of the Reserve Bank of India Act, 1934
(2 of 1934) (the Act), hereby directs that the provisions of Sections 45-IA, 45-IB
and 45-IC of the Act shall not apply to Mortgage Guarantee Company, that is, a
company registered with the Bank under the scheme of registration for Mortgage
Guarantee Companies notified by the Bank in this regard. (P.
Krishnamurthy)
Chief General Manager-in-Charge |