National Housing Bank: Indian Economy

The National home Bank Act of 1987 created the National Housing Bank (NHB) in July 1988 to serve as the premier bank for home finance. It is the main organization in charge of supporting housing finance organizations at the local and regional levels and giving them financial and other support. 

 

•    National Housing Bank is a company that is owned by the government. In 2019, the government acquired the NHB from the RBI after paying Rs. 1,450 crores for the whole stake.

 

•    The action is in reaction to the advice given in the October 2001 report of the Narasimham-II committee.

 

•    Debt instruments including bonds, debentures, and borrowings are used by NHB to raise money.

 

•    Commercial banks are permitted to use its bonds, which are backed by the Government of India, to satisfy the Banking Regulation Act's statutory liquidity requirements.

 

•    Additionally, it gets outside help from foreign agencies like USAID and OECF Japan.

 

•    It accepts deposits from Home Loan Accounts at commercial banks.

 

•    Housing Finance Companies, which are spread out across the nation and control the majority of the market, are refinanced by the National Housing Bank, followed by commercial banks, co-operative banks, and land development banks.

 

•    Depending on the size of the loan, National Housing Bank offers refinancing to housing finance companies at various rates. 

 

•    The lack of long-term financing for individual families on a large scale was identified by the Sub-Group on Housing Finance for the Seventh Five Year Plan (1985-1990) as a major barrier to the development of the housing sector and advocated the creation of a national level organization.

 

•    The recommendation was taken into consideration by the Committee of Secretaries, who then established the High-Level Group under the leadership of Dr. C. Rangarajan, the Reserve Bank of India's deputy governor at the time, to study the matter and make a recommendation for the creation of the National Housing Bank as a stand-alone housing finance organization.

 

•    The Government of India approved the High-Level Group's recommendations.

 

•    While presenting the Union Budget for 1987–88 on February 28, 1987, the Prime Minister of India announced the choice to create the National Housing Bank (NHB) as an apex level organization for housing finance.

 

•    The National Housing Bank Bill, which created the legal basis for the creation of NHB, was subsequently approved by Parliament during the 1987 winter session and was signed into law by the President of India on December 23, 1987.

 

•    The National Housing Board was to be established as the premier housing organization, according to the National Housing Policy of 1988.

 

•    The National Housing Bank Act of 1987 allowed for the establishment of NHB on July 9, 1988.

 

•    The Reserve Bank of India donated the entire paid-up capital.

 

•    A Board of Directors is given authority under the Act to oversee, direct, and manage NHB's operations generally.

 

•    The NHB's main office is in New Delhi.

 

•    In order to link the home finance system with the larger financial system and to establish a strong, healthy, viable, and affordable housing finance system that can serve all facets of the population.

 

•    To promote the growth of a network of specialized housing financing organizations to effectively serve different geographic areas and income levels.

 

•    Should boost resources for the area and focus them on housing.

 

•    To lower the cost of mortgages.

 

•    To keep an eye on home finance firms' operations in accordance with the Act's regulatory authority.

 

•    To promote the improvement of the nation's housing stock and the growth of the amount of land that can be used for construction.

 

•    Encourage government organizations to act as brokers and providers of housing-serviced land.

 

•    A minimum share capital of Rs. 3 crore and a promoter contribution of at least 25% of the total capital are requirements for the home financing firm.

 

•    It needs to be set up as a limited liability corporation. At least 75% of loans must be used for long-term financing of home building or acquisition for residential purposes.

 

•    It can't be a construction company's subsidiary.

 

•    There should be no overlap between the senior management of the Housing Finance Company and the promoters' Construction Company.

 

•    Securing sufficient funding for housing infrastructure construction and a steady flow of liquidity to various housing finance institutions to enable prompt financing for all income groups.

 

•    Ensure that all housing financing companies operating across the nation are properly regulated and supervised.

 

•    The NHB is also in responsibility of auditing these businesses, guaranteeing their adherence to the pertinent regulations, and making sure the establishments make credit readily available at reasonable prices in order to give housing options for everyone.

 

•    The NHB was established with the intention of boosting the nation's housing stock.

 

•    By acting as a facilitator to help businesses in the housing industry obtain money and streamline the entire function, the National Housing Bank helps to significantly increase the amount of land that is accessible for home development. This increases efficiency and production.

 

•    Its primary responsibilities include registering and overseeing all Housing Finance Companies (HFCs), keeping watch over them via on- and off-site techniques, and working with other regulators.

 

•    Monitoring and oversight of real estate firms functioning in India with permission from the National Housing Bank Act.

 

•    A massive fund-raising effort and refinancing for cooperative banks, housing finance firms, and other housing organizations in order to continue lending to private persons and housing infrastructure businesses.

 

•    Regulating and guaranteeing that home finance enterprises adhere to the BASEL guidelines' regulatory capital requirements.

 

•    Confirming that they have sound governance practices, a suitable risk management strategy, and other things in place.

 

•    The National Housing Bank (NHB) developed the NHB RESIDEX as per instructions from the Ministry of Finance, Government of India, and it is the country's first official housing price index. NHB RESIDEX's main points should be noted as follows:

 

•    With the aid of a Technical Advisory Committee (TAC) made up of housing stakeholders, the NHB RESIDEX was created.

 

•    The NHB RESIDEX has been continuously updated since its introduction in July 2007 with 2007 serving as the baseline until March 2015. The NHB RESIDEX eventually grew to include 26 locations nationwide during this time.

 

•    Market data was initially used to generate the NHB RESIDEX. But starting in 2010, it was based on valuation information gathered from banks and housing finance companies (HFCs).

 

•    In order to make the RESIDEX more up-to-date and consistent with the present macroeconomic context, the NHB reviewed the methods used to calculate the index as well as the base year.

 

•    A revised NHB RESIDEX with expanded geographic coverage and a greater scope was then made public. It is current through March 2018 and was computed using fiscal year 2012–13 as the base year.

 

•    A new series of the NHB RESIDEX has been released with effect from April 2018, using the fiscal year 2017–18 as the new base year and updated through the current quarter. 

 

A self-governing organization, the National Housing Bank (NHB) focuses primarily on housing development. It is also responsible for promoting housing finance organizations for the development of housing infrastructure at the national and local levels. Additionally, the NHB meets these institutions' funding needs by either obtaining money for subsequent refinancing or by giving them a guarantee so they can raise money.