1/n A short thread on a story today, which I think is systemically important.

Last week, RBI issued new draft rules for housing finance companies. Until recently, HFCs were under NHB. This was transferred to RBI post the DHFL fiasco.

2/n One of the quirks of NHB rules was that HFCs were allowed to restructure developer loans once without marking them down as NPAs.

This has existed for some time and has gone under the radar even though the RBI clamped down on restructuring forbearance at banks many years ago

3/n Now RBI has taken over regulation of HFCs and is harmonising regulations.

Surprisingly, it has not suggested doing away with this restructuring window available to HFCs. Why? Isn't that the first loophole it should plug?

n/n Some investors, rightly so IMO, say that HFCs should be asked to disclose the extent of restructured developer loans. And from here on, like banks, any restructured loans should be marked as NPAs.

Hope RBI will take note. Story below: https://www.bloombergquint.com/bq-blue-exclusive/rbis-missed-opportunity-in-strengthening-governance-of-housing-finance-firms