Which of the following statements is/are correct with reference to the Housing Finance Companies (HFCs)?

Which of the following statements is/are correct with reference to the Housing Finance Companies (HFCs)?

A. Housing Finance Companies (HFCs) have come under the direct supervision of the Reserve Bank of India (RBI).

B. HFCs base their lending rates on prime lending rate (PLR) and offer a discount on it to customers.

C. Both A & B

D. None of these

Explanation:

Housing Finance Companies (HFCs) have come under the direct supervision of the Reserve Bank of India (RBI) since August 2019 and existing home loan customers are getting differential treatment from banks and HFCs. HFCs base their lending rates on PLR and offer a discount on it to customers. While the discount is fixed for the term of the loan, an upward or downward revision in PLR (in line with repo rate movement) impacts the lending rate of the existing customer. As for new customers, the HFC can increase the discount on the PLR to offer a more attractive rate. A cut in PLR is reflected in the effective rate for the customer within three months.