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The sub-committee of the Financial Stability and Development Council (FSDC), on Thursday, discussed ways to address challenges pertaining to the quality of credit ratings and inter-linkages between housing finance companies (HFCs) and housing developers.
The discussion took place in the backdrop of drastic downgrade in the credit ratings of IL&FS and some of its arms by credit rating agencies last year.
This had a ripple effect, impacting investments made by financial sector entities, including mutual funds, banks, insurance companies and pension funds, in the debt instruments issued by IL&FS and its arms.
The inter-linkages between HFCs and housing developers became evident, as it came to light recently that a large HFC gave four project loans, including for slum re-development projects, and these loans were used to purchase shares of another developer.
According to a Reserve Bank of India statement, the sub-committee also deliberated on inter-linking of various regulatory databases and National Strategy for Financial Inclusion (NSFI).
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