The Reserve Bank of India has issued amendment directions for Mortgage Guarantee Companies that clarify how owned fund is to be computed and specify the Tier 1 capital measure to be used for existing credit and investment concentration norms. The changes amend the 2025 master directions and take effect immediately. Owned fund is defined to include paid-up equity capital, free reserves including quarterly profits, contingency reserves, the share premium balance, and eligible capital reserves from asset sales, after deducting accumulated losses, intangible assets, and deferred revenue expenditure. Quarterly profits can be included only if the quarterly financial statements are subject to limited review or audit by statutory auditors, and the eligible amount must be reduced using the formula EPt = NPt - 0.25 x D x t, where D is the average dividend paid for the previous three financial years and t is the quarter number. Current-year losses must be fully deducted. The amendment also states that a right-of-use asset under Ind AS 116 does not need to be deducted from owned fund if the leased underlying asset is tangible. For compliance with concentration norms, the applicable Tier 1 capital must be taken from the latest available financial statements, whether audited or subject to limited review, and uses the Tier 1 capital definition in paragraph 8(31) of the master directions.

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