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Mortgage Gurantee Companies in India

Release On Tuesday, May 20, 2008   Download Pdf

 

Mortgage Gurantee Companies in India                      Manoj K Singh

A mortgage guarantee company (MGC) is a company which primarily transacts the business of providing mortgage guarantee. MGCs are under the regulatory and supervisory jurisdiction of the Reserve Bank of India (RBI).

A MGC shall commence the business of providing mortgage guarantee after:

(i) Obtaining a certificate of registration from the Reserve Bank of India; and

(ii) Having a net owned fund of Rs1 billion or such other higher amount, as the Reserve Bank of India may, by notification,

specify.

The Reserve Bank of India, for the purpose of considering the application for registration, shall require that the following conditions are fulfilled:

(i) That the mortgage guarantee company shall primarily transact the business of providing mortgage guarantee. A mortgage guarantee company shall be deemed to comply with the above when at least 90% of the business turnover is mortgage guarantee business or at least 90% of the gross income is from mortgage guarantee business (which includes the income derived from reinvesting the income generated from mortgage guarantee business);

(ii) That the mortgage guarantee company is or shall be in a position to pay its liabilities arising from the contracts of guarantee it may enter into;.........

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