HomeCirculars › RBI/2010-11/31

Mortgage Guarantee Companies Prudential Norms 2008 Updated

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Issued by RBI: 01 Jul 2010  ·  Decoded by BankPulse: 20 Jun 2026, 13:49 IST
⏱ ~2 min read
📄 Official RBI source ↗
Quick answerRBI updated the 2008 prudential norms for Mortgage Guarantee Companies as of June 30, 2010. Key definitions include NPA classification from trigger event, doubtful assets after 12 months, and net owned fund calculation. All MGCs must comply immediately.

What changed

RBI issued a consolidated version of the Mortgage Guarantee Companies Prudential Norms Directions, 2008, incorporating amendments up to June 30, 2010. The update brings all current instructions into one place for easier reference. No new policy changes were introduced; it is a compilation exercise.

What it means for you

Mortgage Guarantee Companies must ensure their prudential practices align with the updated definitions, especially for asset classification and net owned fund calculation. The NPA classification from trigger event and doubtful asset aging rules remain critical for provisioning. This circular simplifies compliance by providing a single reference document.

What you must do

Who it affects

All Mortgage Guarantee Companies registered with RBI, Compliance officers of MGCs, Auditors reviewing MGC prudential norms

What is the trigger event for classifying a mortgage guarantee asset as NPA?

An asset acquired from a credit institution on the happening of a trigger event is straight away classified as a non-performing asset. Thereafter, it is classified based on its age.

How is net owned fund calculated under these directions?

Net owned fund is paid-up equity capital plus free reserves, minus accumulated losses, deferred revenue expenditure, and intangible assets. It is further reduced by investments in subsidiaries/group companies and loans to them exceeding 10% of the aggregate.

Does this circular introduce new requirements or just consolidate existing ones?

This circular consolidates all existing instructions from the February 2008 directions as amended up to June 30, 2010, into one document. It does not introduce new requirements.

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AI-drafted · 3-model AI consensus fact-check · under the editorial review of Vikram Jain · decoded & published by BankPulse · 20 Jun 2026, 13:49 IST
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5844&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by Vikram Jain. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.