GK - Banking & Insurance - SPLessons

National Housing Bank

SPLessons 5 Steps, 3 Clicks
5 Steps - 3 Clicks

National Housing Bank

shape Introduction

National Housing Bank (NHB), a completely possessed auxiliary of Reserve Bank of India (RBI), was set up on 9 July 1988 under the National Housing Bank Act, 1987. NHB is a zenith monetary organization for lodging(Housing). NHB enrolls, controls and directs Housing Finance Company (HFCs), keeps observation through on hand and Off-site Mechanisms and co-ordinates with different Regulators.

shape History

  • The Sub-Group on Housing Finance for the Seventh Five Year Plan(1985-90) identified the non-availability of long-term finance to individual households on any significant scale as a major lacuna impeding progress of the housing sector and recommended the setting up of a national level institution

  • The Committee of Secretaries considered’ the recommendation and set up the High Level Group under the Chairmanship of Dr. C. Rangarajan, the Deputy Governor, RBI to examine the proposal and recommended the setting up of National Housing Bank as an autonomous housing finance institution.

  • The Hon’ble Prime Minister of India, while presenting the Union Budget for 1987-88 on February 28, 1987 announced the decision to establish the National Housing Bank (NHB) as an apex level institution for housing finance. Following that, the National Housing Bank Bill (91 of 1987) providing the legislative framework for the establishment of NHB was passed by Parliament in the winter session of 1987 and with the assent of the Honrable President of India on December 23, 1987, became an Act of Parliament.

  • The National Housing Policy, 1988 envisaged the setting up of NHB as the Apex level institution for housing.

  • In pursuance of the above, NHB was set up on July 9, 1988 under the National Housing Bank Act, 1987.

  • NHB is wholly owned by Reserve Bank of India, which contributed the entire paid-up capital.

  • The general superintendence, direction, and management of the affairs and business of NHB vest, under the Act, in a Board of Directors.

  • The Headquarter of NHB is located in New Delhi.

shape Objectives

  • To promote a sound, healthy, viable and cost effective housing finance system to cater to all segments of the population and to integrate 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 augment resources for the sector and channelize 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.

shape Key Points

  • Committee that recommended to set up NHB : C. Rangarajan ( Former Dy. Governor of RBI )

  • NHB was set up under Which Act: National Housing Bank Act, 1987

  • NHB was set up on: July 9, 1988

  • Head Office: New Delhi

  • MD and CEO : Dakshita Das

shape News

  • Indian Overseas Bank has signed an MoU with National Housing Bank for the Rural Housing Interest Subsidy Scheme (RHISS) of the Ministry of Rural Development. ( January 2018 )

  • National Housing Bank (NHB) has decided to increase the Refinance Limit from Rs. 24,000 crore to Rs.30,000 crore for the Current Year (July 2018-June 2019) towards refinancing eligible institutions. ( October 2018 )

  • National Housing Bank has disbursed a subsidy of Rs 3270 crore to over 1.43 lacs households under the Credit-Linked Subsidy Scheme in Housing for All Mission by 2022. (November 2018)

shape FAQ

1. What is a Housing Finance Company (HFC)?

A Housing Finance Company is a company registered under the Companies Act, 1956 (1 of 1956) which primarily transacts or has as one of its principal objects, the transacting of the business of providing finance for housing, whether directly or indirectly.

2. Whether an HFC requires registration from NHB apart from Registrar of Companies?

Yes. An HFC also requires registration with NHB for commencing or carrying on the business of housing finance.

3. Is it necessary that every HFC should be registered with NHB?

In terms of Section 29A of the National Housing Bank Act, 1987, no Housing Finance Company shall commence or carry on the business of a housing finance institution without –

(i) Obtaining a certificate of registration from National Housing Bank issued under Chapter V of the said Act, and
(ii) Having the net owned fund of twenty five lakhs* rupees or such other higher amount, as the National Housing Bank may, by notification, specify.

*NHB, in exercise of its powers have from time to time specified the net owned fund requirements and w.e.f. April 1, 2014, the said requirement is Rs. 10 crore.

4. Whether an HFC can conduct business without obtaining certificate of registration from NHB?

No. In terms of section 29A of the National Housing Bank, 1987, HFCs cannot conduct business of housing finance without obtaining a Certificate of Registration (CoR) from NHB. Conduct of business without obtaining certificate of registration is an offence punishable under the provisions of the National Housing Bank Act, 1987. NHB can also file application for winding up of such HFCs, under section 33B of the said Act.

5. What are the requirements for commencing housing finance business by an HFC under the NHB Act?

For commencing the housing finance business, an HFC is required to have the following in addition to the requirements under the Companies Act, 1956:

(i) Certificate of registration from NHB
(ii) Minimum net owned fund of Rs. 1000 lakhs ( w.e.f. 01.04.2014)