The Reserve Bank of India has issued amendment directions for all Housing Finance Companies that revise the definition of Owned Fund in the 2025 master directions. The change is intended to clarify which components can be counted in Owned Fund, including when quarterly profits may be recognised, and it applies with immediate effect. Under the revised definition, Owned Fund includes paid up equity capital, preference shares that are compulsorily convertible into equity, free reserves including quarterly profits, the balance in the share premium account, and capital reserves representing surplus arising from sale proceeds of assets, while excluding reserves created by asset revaluation. It is reduced by accumulated loss balance, the book value of intangible assets, and deferred revenue expenditure. Quarterly profits can be included only if financial statements are subject to quarterly limited review or audit by statutory auditors, and the amount recognised must be reduced by average dividend paid in the last three years using the formula EPt = NPt - 0.25 * D * t. Losses in the current year must be fully deducted from Owned Fund. Housing Finance Companies are also not required to deduct a Right-of-Use asset created under Ind AS 116 Leases from Owned Fund if the underlying leased asset is a tangible asset.
Reserve Bank of India 2026-03-10
Reserve Bank of India clarifies Housing Finance Companies owned fund calculation and sets conditions for including quarterly profits
The Reserve Bank of India has amended the definition of Owned Fund for Housing Finance Companies in the 2025 master directions, effective immediately. The revised definition includes paid-up equity capital, convertible preference shares, free reserves, and capital reserves, while excluding revaluation reserves and intangible assets. Quarterly profits can be included if audited, with deductions for average dividends and current year losses.