Define National Housing Bank

Introduction

National Housing Bank was established on July 9, 1988 under the National Housing Bank Act, 1987. It is a wholly owned and apex bank of RBI (Reserve Bank of India). The Head Office of NHB is located at New Delhi.

The Preamble of the National Housing Bank Act, 1987 describes the basic functions of the NHB as –

“... to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support to such institutions and for matters connected therewith or incidental thereto...”

Objectives

To promote a sound, healthy, viable and cost effective housing finance system to cater to all segments of the population and to in-tegrate the housing finance system with the overall financial system.

To promote a network of dedicated housing finance institutions to adequately serve various regions and different income groups.

To enlarge resources for the sector and  channelise them for housing.

To make housing credit more affordable.

To regulate the activities of housing finance companies based on regulatory and supervisory authority derived under the Act.

To encourage augmentation of supply of buildable land and also building materials for housing and to upgrade the housing stock in the country.

To encourage public agencies to emerge as facilitators and suppliers of serviced land, for housing.

Organization
It has the following Departments for handling the activities –

Regulation & Supervision

Refinancing Operations

Direct Finance Operations

Enabling Processes

Information Technology

Resource Mobilization and Management

Development and Risk Management

Board and CMD Secretariat

Legal Department

Milestones

Finance Functions of NHB

NHB supports housing finance sector by:

Extending refinance to different primary lenders in respect of

Eligible housing loans extended by them to individual beneficiaries,

Project loans extended by them to various implementing agencies.

Lending directly in respect of projects undertaken by public housing agencies for house construction and development of housing related infrastructure.

Guaranteeing the repayment of principal and payment of interest on bonds issued by Housing Finance Companies.

Acting as Special Purpose Vehicle for securitizing the housing loan receivables.

Refinance Assistance of NHB

In India, a large number of Primary Lending Institutions are providing housing finance to individual borrowers, builders, corporate houses etc. for purchase/construction of houses and for repair / up gradation of existing house. NHB extends refinance to the following categories of institutions in respect of the housing loans provided by them.

Housing Finance Company

Scheduled Commercial Banks

Scheduled Urban Cooperative Banks

Regional Rural Banks

State Level Apex Co-operative Housing Finance Companies

Agriculture and Rural Development Banks

Promotion Functions of NHB

Promoting, establishing and supporting housing finance institutions.

Granting loans and advances

Purchasing Housing finance companies shares and bonds

Guaranteeing the loan taken by housing finance companies from the open market

Underwriting the issue of securities of Housing finance companies

Discounting and rediscounting the bills of exchange of housing finance

Dealing with the Mortgage of Immovable properties belonging to housing finance institutions

Promoting mutual funds of housing finance

Conducting research and undertaking survey on construction activities.

Initiating various schemes for the extension of housing unit

Coordinating with LIC, UTI, GIC and other financial institutions

Regulatory Functions of NHB

National Housing Bank is the regulatory authority of Indian housing finance system as per the act of National Housing Bank Act, 1987. The purpose of holding the controlling power is to regulate the housing finance institutions in the interest of the depositors and borrowers. In addition to this provision, NHB issues directions and guidelines to HFCs for its financial assistance, prudential norms for income recognition, asset classification and Asset Liability Management System etc.

The main businesses and finance products of NHB

Raising Resources by issuing bonds or debentures, borrowing from reserve bank of India and other financial institutions

NHB launched “Swarna Jayanti Rural Housing Finance Scheme” to make housing loans accessible to housing development works in rural India on the occasion of the golden jubilee of India’s Independence

Mortgage Backed Securitisation and development of secondary mortgage market in India

Mortgage Credit Guarantee scheme for protection of lenders against any default.

Providing Refinance to Housing Finance Institutions

National Housing Bank is engaged in Project Finance for large-scale housing projects also.

The finance products by NHB include Equity Support and Reverse Mortgage loans along with the above listed services