NHB(ND)/DRS-REG/DIR/1424/2002

July 02, 2002

To all housing finance companies

Dear Sir,

THE HOUSING FINANCE COMPANIES (NHB) DIRECTIONS, 2001

In terms of provisions of the captioned Directions, an asset where terms of the loan agreement regarding interest and/or principal have been re-negotiated or rescheduled is a sub-standard asset until the expiry of one year of satisfactory performance under the re-negotiated or rescheduled terms.

2. In the wake of the recent riots in the state of Gujarat, it has been decided to give exemption from clause (ii) of paragraph 2(1)(za) of the Directions in the following manner and subject to the following conditions :

a.) Where the repaying capacity of the borrower has been affected due to the aforesaid riots, the housing finance company may reschedule the terms of the loan agreement regarding interest and repayment and such rescheduled loans need not be classified as sub-standard assets.

b.) The asset classification of such loans would thereafter be governed by the revised terms and conditions and they would be treated as sub-standard on the basis of the revised period for which interest and/or instalment of principal remains unpaid, as stipulated in the Directions.

c.) Any provisioning made prior to such reschedulement shall neither be written back nor adjusted against any provisioning requirements that may arise in future.

d.) The exemption comes into force with immediate effect and shall be valid only for the financial year 2002-03.

3. Please acknowledge receipt of this circular.

Yours faithfully,

Sd/-

(Deputy General Manager)

Dept. of Regulation & Supervision