National Housing Bank (NHB) is the apex financial institution for housing in India, wholly owned by Reserve Bank of India. It was established in 1988 under an Act of Parliament. NHB has three main functions viz. to regulate the housing finance companies, to promote and develop the housing finance market and to provide financial assistance to housing finance institutions and others.

To serve its mandate, NHB is mobilizing funds from different sources. NHB is now seeking a new foray into the retail market by offering three new savings schemes for the individual depositors. The three schemes that have been launched are a) NHB SUNIDHI Term Deposit Scheme b) NHB SUVRIDDHI (Tax Saving) Term Deposit Scheme and c) NHB SUMERU Zero Coupon Bond. All three schemes has been rated FAAA by CRISIL and tAAA by Fitch indicating highest safety with regard to timely payment of financial obligations.

NHB SUNIDHI Term Deposit Scheme is a deposit scheme for Resident Indian Individuals, Hindu Undivided Families (HUFs), Societies & Trusts, Partnership Firms and Association of Persons. The minimum deposit in the scheme is Rs. 50,000/- and thereafter in multiples of Rs. 10,000/-.The deposit can be made for maturity of 12 months/24 months/36 months & 60 months. The interest rates on offer are 9.25 % p.a. for 12 months /24 months and 9.00% p.a. for 36 months/ 60 months. Both cumulative and non-cumulative interest options are available in the scheme.

NHB SUVRIDDHI (Tax Saving) Term Deposit Scheme is a tax saving deposit scheme. The Central Govt. has notified the said scheme under section 80 C of the Income Tax Act, 1961 vide notification No. S.O. 21(E) dated 5th January 2009. The scheme will provide one more avenue of placing deposit for Resident Indian Individuals & HUFs for getting exemption U/s 80 C of Income Tax Act 1961.The minimum deposit under the scheme is Rs. 10,000/-and thereafter in multiple of Rs. 10,000 with the maximum of Rs. 1,00,000/-. The deposit under the scheme will have the lock-in period of 60 months with interest rate of 8.75 % p.a. compounded quarterly. Both cumulative and non-cumulative interest options are available in the scheme.

NHB SUMERU Zero Coupon Bond are the Zero Coupon Bonds notified by Govt. of India under section 2(48) of Income Tax Act,1961.Each bond has a face value of Rs. 10,000/- with a maturity of 10 years. The minimum investment shall be in one bond and thereafter in multiple of one bond. The bonds will be listed at NSE for secondary market trading.

The gain arising out of secondary market sale before maturity or redemption at maturity would be treated as capital gain and taxed in the hands of investor accordingly. Thus if the bond is held by investor for more than 1 year and the investor does not claim the benefit of indexation then the gain will be treated as long term gain and taxed accordingly and not as interest income which is taxable at higher rate of up to 30% plus cess depending upon the tax bracket in which investor falls. Further, no tax will be deducted at source in respect of income payable on the Zero Coupon Bond.

NHB has already issued first tranche aggregating to 7.50 lacs bonds of Rs. 10,000/- each on 24.12.2008 at YTM of 8.65 %. The funds mobilized under the above schemes would be used by NHB for its business activities.

email: kchakravarthy@nhb.org.in

Shri K .Chakravarthy 011 24617832