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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/369 DOR.FIN.REC.No.288/23-11-001/2025-26

RBI has issued RBI (Mortgage Guarantee Companies) Directions, 2025 effective from 28th November 2025. Key Highlights: 1. Applicability - All Mortgage Guarantee Companies (MGCs) registered with the RBI. 2. Board Responsibilities - Every MGC must have Board-approved policies for capital planning, investments, mortgage guarantee schemes, and staff compensation, with regular reviews. 3. Registration Conditions - MGC must obtain RBI registration, maintain a minimum net owned fund of Rs. 100 crore, and ensure that at least 90% of its business or income comes from mortgage guarantee activities. 4. Grounds for Cancellation - RBI may cancel registration if the MGC stops the guarantee business, violates conditions, fails to honour guarantees, disobeys RBI directions, or does not maintain proper accounts. 5. Permitted Activities - An MGC may conduct other NBFC-like activities only up to 10% of its assets but cannot undertake insurance business. Mortgage guarantee contracts must be unconditional, irrevocable, and payable on invocation. 6. Capital & Prudential Norms - MGCs must maintain a minimum capital adequacy ratio of 10%, with at least 6% as Tier 1 capital, and follow detailed rules for calculating risk-weighted assets for both on-balance-sheet and off-balance-sheet items. 7. Investment Norms & Governance - MGCs can invest only in specific safe instruments, must hold at least 25% of investments in government securities, and follow governance norms such as Audit Committee, Risk Committee, and KMP/Independent Director requirements. For more information, please refer to the attached document.

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