BUSINESS ACTIVITIES

NHB, as the Apex level financial institution for the housing sector in the country, performs the following roles:

(a) Promotion and Development:

NHB operates as a multifunctional Development Finance Institution (DFI) for the housing sector. The Bank's policies are directed towards promotion and development of housing finance institutions. NHB has framed guidelines for HFCs with a view to promoting their development on sound and healthy lines. The guidelines are reviewed and modified from time to time in the light of developments in the financial and housing sectors. All HFCs registered with the National Housing Bank u/s 29A of the National Housing Bank Act, 1987 and inter alia having minimum net owned funds of Rs.10.0 crores are aligible for refinance support. It has also contributed to the equity capital of five HFCs. NHB has a dedicated Training Division which organises regular training programmes in areas relating to housing and housing finance for development of management capabilities of officials working in the sector. NHB's promotional endeavours are also directed towards capacity building for the housing finance system besides enlarging the credit absorption capacity.

(b) Regulation and Supervision:

NHB exercises regulatory and supervisory authority over the HFCs in the matter of acceptance of deposits by them pursuant to the powers vested in it under the Act. As per the amendments to certain provisions of the Act, which came into effect from June 12, 2000, NHB is vested with powers to grant Certificate of Registration to companies for commencing/carrying on the business of a housing finance institution. Besides, NHB regulates the deposit acceptance activities in accordance with the Housing Finance Companies (NHB) Directions, 2001, amended from time to time, in the matter of ceiling on borrowings (including public deposits, rate of interest, period, liquid assets, etc). NHB has also issued Directions on prudential norms in regard to capital adequacy, asset classification, concentration of credit, income recognition, provisioning for bad and doubtful debts etc. NHB supervises the working of HFCs through on-site inspection and off-site surveillance.

(c) Financing:

NHB raises resources for the housing sector towards increasing new housing stock and provides refinance to a large set of retail lending institutions. These include scheduled commercial banks, scheduled state cooperative banks, scheduled urban cooperative banks, specialised housing finance institutions, apex co-operative housing finance societies and agriculture and rural development banks. Refinance is provided by NHB under various schemes, which are formulated taking into account, several aspects of the National Housing Policy, the constraints facing the sector etc. NHB has also a window for direct lending to Public Agencies such as, State Level Housing Boards and Area Development Authorities for large scale integrated housing projects and slum redevelopment projects.
NHB is also operating a special window for extending financial assistance to the people affected by natural calamities viz. eaerthquake, cyclone etc.

(d) Resources of NHB

NHB raises resources from diversified sources, both domestic and external by issuing Bonds/ debentures, borrowing from RBI and financial institutions/organisations etc. Under the Act, NHB is authorised to issue and sell Bonds with or without the guarantee of the Central Government for the purpose of carrying on its functions.

(e) Rural Housing:

NHB launched the "Swarna Jayanti Rural Housing Finance Scheme" to mark the golden jubilee of India's Independence. The Scheme seeks to provide improved access to housing loans to borrowers for construction/acquisition/ up-gradation of a house in rural areas of the country.

(f) Recent Initiatives

Securitisation of mortgage loans of the retail lending institutions facilitates for channelising household savings into the housing sector is seen as a potentially viable market oriented alternative. Support to Mortgage backed securitisation is a major policy initiative of the Government as manifested in its National Housing and Habitat Policy announced in 1998. This policy emphasises NHB's lead role in mortgage-backed securitisation and development of a secondary mortgage market in the country. As the apex body in housing finance sector in India, NHB has been playing a lead role in the sector in matters relating to policy environment as also operational mechanism for the development of a secondary mortgage market in India.

In order to resolve the twin problems of affordability and accessibility affecting the growth of the housing finance business and the prospect of home ownership, NHB has been entrusted with the responsibility of launching a Mortgage Credit Guarantee Scheme for protecting the lenders against default.