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

(a) which is repayable on demand or on notice; or

(b) 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 deposits.

Explanation

Where a public deposit is in Instalments, the period of such deposit shall be computed from the date of receipt of first Installment.

Joint deposit

5. Where so desired, deposits may be accepted in joint names with or without any of the clauses, namely, “Either or Survivor”, “Number One or Survivor/s”, “Anyone or Survivor/s”.

Particulars to be specified in application form soliciting public deposits

6 (i) No housing finance company shall accept or renew any public deposit 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 58A of the Companies Act, 1956 (1 of 1956) and also contain the particulars of the specific category of the depositors, i.e. 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 director of the company.

(ii) The application form shall also contain the following:-

(a) the credit rating assigned for its deposits and the name of the credit rating agency which rated the housing finance company;

(b) a statement to the effect that in case of any deficiency of the housing finance company in servicing its deposits, the depositor may approach the National Consumers Disputes Redressal Forum, the State Level Consumers Disputes Redressal Forum or the District Level Consumers Dispute Redressal Forum for relief;

(c) a statement to the effect that in case of non-repayment of the deposit or part thereof in accordance with the terms and conditions of the deposit, the depositor may make an application to authorised officer of the National Housing Bank;

(d) a statement to the effect that the financial position of the housing finance company as disclosed and the representations made in the application form are true and correct and that the housing finance company and its Board of Directors are responsible for the correctness and veracity thereof;

(e) a statement to the effect that the housing finance company is within the regulatory framework of the National Housing Bank. It must, however, be distinctly understood that the National Housing Bank does not undertake any responsibility for the financial soundness of the housing finance company or for the correctness of any of the statements or the representations made or opinions expressed by the housing finance company; and for repayment of deposit/ discharge of liabilities by the housing finance company;

(f) the information relating to and the aggregate dues from the facilities, both fund and non-fund based, extended to, and the aggregate dues from companies in the same group or other entities or business ventures in which the directors and/or the housing finance company are/is holding substantial interest and the total amount of exposure to such entities;

(g) at the end of application form but before signature of the depositor, the following verification clause by the depositor shall be appended. “I have gone through the financial and other statements/ particulars/representations furnished/ made by the housing finance company and after careful consideration I am making the deposit with the housing finance company at my own risk and volition.

Introduction of depositors

7. 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.

Explanation:

For the purpose of this paragraph, introduction shall mean identification of the prospective depositor and may be done either by one of the existing depositors or on the basis of any one of Income Tax Permanent Account Number (PAN), Election Identity Card, Passport, or Ration Card.

Furnishing of receipts to depositors

8. (1) Every housing finance 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 these Directions.

(2) 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 depositor, the amount in words and 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.

Provided that, if such receipts pertain to Installments subsequent to the first installment of a recurring deposit it may contain only name of the depositor/s, date and amount of deposit.

Register of deposits

9. (1) 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,

(a) name and address of the depositor or group of joint depositors, their nominees,

(b) date and amount of each deposit,

(d) date and amount of accrued interest or premium on each deposit,

(e) date and amount of each repayment, whether of principal, interest or premium,

(f) date of claim made by the depositor,

(g) the reasons for delay in repayment beyond five working days, and

(h) any other particulars relating to the deposits.

(2) The register or registers aforesaid shall be kept at each branch in respect of the deposit accounts opened by that branch of the housing finance 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 a period of not less than eight years following the financial year in which the latest entry is made of the repayment or renewal of any deposit of which particulars are contained in the register:

Provided that, if the housing finance company keeps the books of account referred to in sub-section (1) of Section 209 of the Companies Act, 1956 (1 of 1956) at any place other than its Registered Office in accordance with the provisions to that sub-section, it shall be sufficient compliance with this sub-paragraph if the register aforesaid is kept at such other place, subject to the condition that the housing finance company delivers to the National Housing Bank a copy of the notice filed with the Registrar under the proviso to the said sub-section within seven days of such filing.

Information to be included in the Board’s Report

10. (1) 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 particulars or information, namely:

(a) the total number of accounts of public deposit 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 deposit became due for re-payment; and

(b) the total amounts due under such accounts remaining unclaimed or unpaid beyond the dates referred to in clause (a) as aforesaid.

(2) 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 to 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

11. (1) (a) On and from 6^th July, 2007 no housing finance company shall invite or accept or renew any public deposit at a rate of interest exceeding twelve and half per cent per annum such interest being payable or compounded at rests which should not be shorter than monthly rests.

(b) On and from 20^th September 2003, no housing finance company shall invite or accept or renew repatriable deposits from non-resident Indians in terms of Notification No. FEMA.5/2000-RB dated May 03, 2000 under Non-Resident (External) Account Scheme at a rate exceeding the rates specified by the Reserve Bank of India for such deposits with scheduled commercial banks.

Explanation: The period of deposits shall not be less than one year and not more than three years.

(i) brokerage, commission, incentive or any other benefit by whatever name called in excess of two per cent of the deposit so collected;

(ii) expenses by way of reimbursement on the basis or relative vouchers/bills produced by him, in excess of 0.5% of the deposit so collected.

(2) Payment of interest on overdue deposit - A housing finance company may, at its discretion, allow interest on an overdue public deposit or a portion of the said overdue deposit from the date of maturity of the deposit subject to the conditions that -

(i) the total amount of overdue deposit or the part thereof is renewed in accordance with other relevant provisions of these Directions, from the date of its maturity till some future date, and

(ii) the interest allowed shall be at the appropriate rate operative on the date of maturity of such overdue deposit which shall be payable only on the amount of deposit so renewed:

Provided that where a housing finance company fails to repay the deposit along with interest on maturity on the claim made by the depositor, the housing finance company shall pay interest from the date of claim till the date of repayment at the rate as applicable to the deposit.

General provisions regarding repayment of deposits

12. (i) No housing finance company shall repay any public deposit within a period of three months from the date of its acceptance.

(ii) Where a housing finance company at the request of depositor/s repays a publicdeposit after the period indicated in clause (i) above but before its maturity, it shall pay interest at the following rate:

(a) minimum lock in period

three months

(b) after three months but before six months

no interest

The interest payable shall be two percent lower than the interest rate applicable to a public deposit for the period for which the deposit has run or if no rate has been specified for that period, then three percent lower than the minimum rate at which the public deposits are accepted by that Housing Finance Company.

(iii) A housing finance company may grant a loan up to seventy-five percent of the amount of public deposit to a depositor after the expiry of three months from the date of public deposit at a rate of interest two percentage points above the interest rate payable on the public deposit.

(iv) It is obligatory on the part of a housing finance company to intimate the details of maturity of the deposit to the depositor at least two months before the date of maturity of the deposit.

(v) all deposit accounts standing to the credit of sole/first named depositor in the same capacity shall be clubbed and treated as one deposit account for the purpose of premature repayment.

(vi) Provided that in the event of death of a depositor, the public deposit may be paid prematurely to the surviving depositor/s in the case of joint holding with the survivor clause, or to the nominee or legal heir/s with interest at the contracted rate up to the date of repayment.

(vii) For the purpose, housing finance companies are classified into two categories viz. a problem housing finance company and a normally run housing finance company. A housing finance company, which is normally run housing finance company, with effect from the date of this notification, can permit premature repayment of a public deposit after the lock-in period at its sole discretion only and premature closure cannot be claimed as a matter of right by the depositors. The problem housing finance companies have been prohibited from making premature repayment of any public deposits or granting any loan against public deposits except in the case of death of the depositor or in the case of tiny deposit up to Rs.10,000/- in entirety or to enable the depositor to meet expenses of an emergent nature up to an amount not exceeding Rs.10,000/-.

A problem housing finance company is one which:

(i) has refused or failed to meet within five working days any lawful demand for repayment of the matured public deposits; or

(ii) intimates the Company Law Board under section 58AA of the Companies Act, 1956, about its default to a small depositor in repayment of any public deposit or part thereof or any interest thereupon; or

(iii) approaches the Bank for withdrawal of the liquid asset securities to meet its deposit obligations; or closure

(iv) approaches the Bank for any relief or relaxation or exemption from the provisions of these directions for avoiding default in meeting public deposit or other obligations; or

has been identified by the National Housing Bank to be a problem housing finance company either suo moto or based on the complaints from the depositors about non-repayment of public deposits or on complaints from the company’s lenders about non-payment of dues.

Renewal of public deposit before maturity

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

(i) 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

(ii) the interest on the expired period of the public deposit is reduced by one percentage point from the rate at which the housing finance company would have ordinarily paid, had the deposit 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

14. (1) Every housing finance company shall entrust to one of the scheduled commercial banks designated 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 29B of the National Housing Bank Act, 1987;

Provided that 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 place other than the place at which its registered office is situated or to keep them in the form of Constituent’s Subsidiary General Ledger Account with a schedule commercial bank, or with 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.

(2) the securities mentioned in sub-paragraph (1) above shall continue to be entrusted to such designated banker or to the Stock Holding Corporation of India Ltd. or the depository participant or held in the constituent’s subsidiary General Ledger Account with the scheduled commercial bank for the benefit of the depositors and shall not be withdrawn or encashed or otherwise dealt with by the housing finance company except for repayment to the depositors.

Provided that,

(1) a housing finance company shall be entitled to withdraw a portion of such securities proportionate to the reduction of its deposits duly certified to that effect by its auditors;

(2) where the housing finance company intends to substitute such securities, it may do so by entrusting substitute securities of equal value to the designated bank before such withdrawal.

Explanation

‘scheduled commercial bank’ means a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) excluding a Regional Rural Bank or a Co-operative Bank.

Creation of Floating Charge in favour of the Depositors

15. All Housing Finance Companies accepting/holding public deposits shall create floating charge on the assets invested by them in terms of sub-sections (1) and (2) of Section 29B of the National Housing Bank Act, 1987 in favour of their depositors in a manner as may be prescribed by National Housing Bank from time to time, in this behalf.

Employee Security Deposit

16. A housing finance company receiving any amount in the ordinary course of its business as security deposit from any of its employees for due performance of his duties shall keep such amount in an account with a scheduled commercial bank or in a post office in the joint names of the employee and the housing finance company on the conditions that -

(1) it shall not withdraw the amount without the consent in writing of the employee; and

(2) the amount shall be repayable to the employee along with interest payable on such deposit account unless such amount or any part thereof is liable to be appropriated by the housing finance company for the failure on the part of the employee for due performance of his duties.

Advertisements and statement in lieu of advertisement 17. (1) Every housing finance company soliciting public deposits shall comply with the provisions of the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977 and shall also specify in every advertisement to be issued thereunder, the following : (a) the actual rate of return by way of interest, premium, bonus or other advantage to the depositors; (b) the mode of payment to the depositors; (c) maturity period of deposits; (d) the interest payable on a specified deposit; (e) the rate of interest which will be payable to the depositors in case the depositor withdraws the deposit prematurely; (f) the terms and conditions subject to which a deposit will be renewed; (g) any other special features relating to the terms and conditions subject to which the deposits are accepted/ renewed; and (h) the information, relating to the aggregate dues (including the non-fund based facilities) provided to/ from companies in the same group or other entities or business ventures in which the directors and/ or the housing finance company are holding substantial interest and the total amount of exposure to such entities. (2) Where a housing finance company intends to accept public deposits without inviting or allowing or causing any other person to invite such deposits, it shall, before accepting deposits, deliver to the office of the National Housing Bank at New Delhi for registration, a statement in lieu of advertisement containing all the particulars required to be included in the advertisement pursuant to the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977 as also the particulars stated in sub-paragraph (1) hereinabove, duly signed in the manner provided in the aforesaid Rules. (3) A statement, delivered under sub-paragraph (2) shall be valid till the expiry of six months from the date of closure of the financial year in which it is so delivered, or until the date on which the balance sheet is laid before the annual general meeting, or where the annual general meeting for any year has not been held, the latest day on which that meeting should have been held in accordance with the provisions of the Companies Act, 1956(1 of 1956), whichever is earlier and a fresh statement shall be delivered in each succeeding financial year before accepting deposits in that financial year.
Full cover for public deposits 18. HFCs should ensure that at all times there is full cover available for public deposits accepted by them. While calculating this cover the value of all debentures (secured and unsecured) and outside liabilities other than the aggregate liabilities to depositors may be deducted from the total assets. Further, the assets should be evaluated at their book value or realizable/market value whichever is lower for this purpose.
Prior approval for acquisition or transfer of control of deposit taking housing finance companies 19. Any takeover or acquisition of control of a deposit taking housing finance company, whether by acquisition of shares or otherwise, or any merger or amalgamation of a deposit taking housing finance company with another entity, or any merger or amalgamation of an entity with a deposit taking housing finance company, shall require prior approval of the National Housing Bank in writing.
Application of other laws not barred 20. The provisions of paragraph 19 shall be in addition to, and not in derogation of the provisions of any other law, rules, regulations or directions, for the time being in force.
Closure of Branches 21. No housing finance company accepting deposits shall close its branch/office without publishing such intention in any one national level newspaper and in one vernacular newspaper in circulation in the relevant place and without advising National Housing Bank, before ninety days of the proposed closure.

Advertisements and statement in lieu of advertisement 17. (1) Every housing finance company soliciting public deposits shall comply with the provisions of the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977 and shall also specify in every advertisement to be issued thereunder, the following : (a) the actual rate of return by way of interest, premium, bonus or other advantage to the depositors; (b) the mode of payment to the depositors; (c) maturity period of deposits; (d) the interest payable on a specified deposit; (e) the rate of interest which will be payable to the depositors in case the depositor withdraws the deposit prematurely; (f) the terms and conditions subject to which a deposit will be renewed; (g) any other special features relating to the terms and conditions subject to which the deposits are accepted/ renewed; and (h) the information, relating to the aggregate dues (including the non-fund based facilities) provided to/ from companies in the same group or other entities or business ventures in which the directors and/ or the housing finance company are holding substantial interest and the total amount of exposure to such entities. (2) Where a housing finance company intends to accept public deposits without inviting or allowing or causing any other person to invite such deposits, it shall, before accepting deposits, deliver to the office of the National Housing Bank at New Delhi for registration, a statement in lieu of advertisement containing all the particulars required to be included in the advertisement pursuant to the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977 as also the particulars stated in sub-paragraph (1) hereinabove, duly signed in the manner provided in the aforesaid Rules. (3) A statement, delivered under sub-paragraph (2) shall be valid till the expiry of six months from the date of closure of the financial year in which it is so delivered, or until the date on which the balance sheet is laid before the annual general meeting, or where the annual general meeting for any year has not been held, the latest day on which that meeting should have been held in accordance with the provisions of the Companies Act, 1956(1 of 1956), whichever is earlier and a fresh statement shall be delivered in each succeeding financial year before accepting deposits in that financial year.
Full cover for public deposits 18. HFCs should ensure that at all times there is full cover available for public deposits accepted by them. While calculating this cover the value of all debentures (secured and unsecured) and outside liabilities other than the aggregate liabilities to depositors may be deducted from the total assets. Further, the assets should be evaluated at their book value or realizable/market value whichever is lower for this purpose.
Prior approval for acquisition or transfer of control of deposit taking housing finance companies 19. Any takeover or acquisition of control of a deposit taking housing finance company, whether by acquisition of shares or otherwise, or any merger or amalgamation of a deposit taking housing finance company with another entity, or any merger or amalgamation of an entity with a deposit taking housing finance company, shall require prior approval of the National Housing Bank in writing.
Application of other laws not barred 20. The provisions of paragraph 19 shall be in addition to, and not in derogation of the provisions of any other law, rules, regulations or directions, for the time being in force.
Closure of Branches 21. No housing finance company accepting deposits shall close its branch/office without publishing such intention in any one national level newspaper and in one vernacular newspaper in circulation in the relevant place and without advising National Housing Bank, before ninety days of the proposed closure.

Pages

Period Of Deposits - Housing Finance Regulatory