Annual Report 2000-2001

NHB's Operations

4.1 Resources

4.1.1 Capital
The paid-up share capital of NHB continued to stand at Rs.350 crore as at the end of June, 2001 with no change during the year under review.

4.1.2 Profit
The Bank has earned a gross profit of Rs.111.36 crore during 2000-01. This represents an increase of 33.06 per cent over the profit of 1999-2000, which was Rs. 83.69 crore.

4.1.3 Borrowings
During July 2000 - June 2001, NHB raised resources of the order of Rs. 499.50 crore (rupee borrowing) from various sources as per details given below:

Borrowings of NHB 2000-2001

Nature Amount raised( Rs in crore )
(i) Tax Free Bonds 100.00
(ii) Priority Sector Bonds (Taxable) 225.40
(iii) Priority Sector Bonds (Taxable- 2nd Tranche) 174.10
TOTAL 499.50

A. INTERNAL BORROWINGS:

(i) Tax- Free Bonds:
The Government allocated to NHB Rs.100.00 crore under Tax Free Bonds during the year for financing 1,50,000 dwelling units under the Golden Jubilee Rural Housing Finance Scheme. The coupon rate of these bonds was 7.5% payable annually with a maturity period of 10 years. The cumulative amount raised by the Bank under Tax Free Bonds has been Rs. 650.00 crore as on June 30, 2001.

(ii) Taxable Bonds
NHB raised Rs. 225.40 crore through issue of 11.25 % Priority Sector Taxable Bonds having maturity of 7 years, with partial redemption of 30%, 30% and 40% at the end of 5th, 6th and 7th year, respectively and interest payable annually. Besides, the Bank raised Rs. 174.10 crore through issue of second tranche of Priority Sector Bonds at 10.25 % having maturity of 5 years with put and call option at the end of 3rd year. The cumulative amount mobilised under Priority Sector Taxable Bonds as on June 30, 2001 was Rs. 1299.70 crore.

4.1.4 During the year, NHB was sanctioned a loan of US$ 40 million by the Asian Development Bank (ADB) under its Housing Finance II project. The said loan will be for a period of 25 years including moratorium period of 5 years.

4.1.5 The outstanding borrowings of NHB stood at Rs.5255.78 crore as on June 30, 2001.During the year, amount aggregating Rs.74.66 crore of the borrowings fell due and was repaid.

4.2 Deployment
4.2.1 The details of disbursements by NHB during the year 2000-2001 were as follows:

GENERAL FUND

(Rs. in crore)
Refinance Disbursals 1999-2000 2000-2001 Cumulative
a) Individuals 841.68 1003.13 5986.98
b) Projects 0.00 0.00 234.50
Total 841.68 1003.13 6221.48
Direct Finance Disbursal 40.74 42.05 104.68
Total disbursals from General Fund 882.42 1045.18 6326.16

SLUM IMPROVEMENT & LOW COST HOUSING FUND
Refinance : Projects 0.00 0.00 11.29
Direct Finance : Projects 9.76 27.37 51.87
Total 9.76 27.37 63.16

4.2.2 Refinance
(a) The disbursement of refinance crossed the Rs. 1000 crore threshold for the first time since the inception of the Bank and stood at Rs.1003.13 crore for the year 2000-2001 as compared to Rs. 841.68 crore during the previous year. In percentage terms, the year 2000-01 witnessed a higher growth of 19.18 % as compared to 12.67% growth witnessed during the previous year. The cumulative refinance disbursed by NHB stood at Rs. 6221.48 crore as at the end of June,2001. Apart from this an amount of Rs.4.47 crore was provided as refinance at concessional rate to scheduled commercial banks in respect of their lending to individuals in the cyclone affected areas of Orissa. Details of disbursements are as under:

[Rs. in crore]
Institutions Amount disbursed during the previous year(July'99 to June'2000) Amount disbursed during the current year(July'2000 to June'2001) Cumulative disbursements upto June 30, 2001
Scheduled BanksCooperative Sector InstitutionsHousing Finance Companies 2.40187.81651.47 101.19140.57761.37 343.841066.744810.90
TOTAL 841.68 1003.13 6221.48

(b) While the disbursement to Housing Finance Companies (HFC) and Scheduled Banks increased during the year, the same to cooperative sector institutions registered a decline of 25.15%.

(c) During the year two new State level Apex Cooperative Housing Finance Societies (ACHFS) viz., Karnataka State Cooperative Housing Federation Ltd. and Pondicherry State Cooperative Housing Federation Ltd. and one Housing Finance Company viz., ICICI Home Finance Ltd. were sanctioned refinance limits for the first time and refinance was disbursed to Pondicherry State Cooperative Housing Federation Ltd.

(d) The HFCs continued to be the major beneficiaries of NHB's refinance assistance, accounting for 75.90% of the total refinance released during the year. However, their share has come down from 77.40% during the previous year. In absolute terms, the refinance disbursed to HFCs was Rs.761.37 crore during the year 2000-01 as compared to Rs.651.47 crore during the previous year. Refinance to scheduled banks registered a significant increase to Rs. 101.19 crore during 2000-01 as compared to Rs.2.40 crore in the previous year. Out of the banks' share of NHB refinance during the year, refinance assistance of Rs.79.47 crore was disbursed to the scheduled commercial banks against their lending for housing to the cyclone affected people in the state of Orissa.

(e) The co-operative sector institutions availed Rs.140.57 crores as refinance from NHB accounting for 14.01 % of the total refinance released during the year 2000-01. The share of these institutions declined from 22.31% during the year 1999-2000. However, the share of these institutions in the cumulative refinance assistance disbursed till June 30, 2001 was 17.5%.

(f) As in the previous year, the entire amount of refinance disbursed during 2000-01 was in respect of individual loans only.

(g) Refinance assistance to SCBs in respect of their lending for housing in the cyclone hit areas in Orissa: With a view to ameliorating the hardship caused by the devastating super cyclone in Orissa, NHB announced a special dispensation programme to extend refinance assistance to the extent of Rs.100 crore to Scheduled Commercial Banks (SCB) in respect of their lending for housing to the cyclone affected people in the state of Orissa. Of this sum, an amount of Rs.75 crore was earmarked to be refinanced from under the General Fund whereas the rest Rs.25 crore was allocated under the Special Fund. Under the scheme, an amount of Rs.79.47 crore has been disbursed as refinance to SCBs. This includes an amount of Rs. 75 crore from the General Fund and Rs.4.47 crore from the Special Fund refinanced at a concessional rate of interest.

(h) Financial assistance for lending in the flood affected areas of Andhra Pradesh: Devastating floods struck the state of Andhra Pradesh during the later half of 2000 causing widespread damage to life and property. NHB decided to extend refinance assistance to HFCs in respect of their lending for repairs of houses damaged by the flood in the fifteen flood affected districts of Andhra Pradesh. The refinance was offered at a concessional rate of interest. This facility was available till June 2001.

(i) Refinance Scheme for Housing in the earthquake affected districts of Gujarat: In the wake of the devastating earthquake in Gujarat in January 2001 which caused widespread loss of life and extensive damage to the property, NHB has launched a scheme to extend refinance assistance to HFCs and Scheduled Banks in respect of their lending for housing in the earthquake affected districts in the state. The objective of this Refinance Scheme is to encourage construction of new houses/flats as also extension and upgradation [including major repairs] of the existing housing stock in the earthquake affected districts of Gujarat State. HFCs and Scheduled Banks who have predominant presence in the State of Gujarat by way of their branch network could utilize the Refinance Scheme and assist such persons to have a shelter of their own by extending need-based housing loans to them. NHB refinance is available to the extent of 100 per cent of housing loans sanctioned and disbursed by the HFCs and Scheduled Banks for acquisition/ construction of new housing units and for upgradation / major repairs at a rate of interest of 6.5%. The HFCs/ banks would provide housing loan to individuals under the scheme at a maximum interest rate of 8%. Under the scheme an amount of Rs.61.35 lakh was disbursed during the year. For this purpose, the Reserve Bank of India sanctioned a soft loan of Rs. 1000 crores to NHB for deployment towards the early construction of houses as well as the infrastructure network that suffered extensive damage due to the earthquake. The loans will be repayable over a period of 15 years. NHB will provide these funds to housing finance companies and scheduled banks through its refinance and direct lending schemes.

4.2.3 Project Finance
Since its inception in 1988, NHB had been extending financial assistance to public agencies through the refinance window. From the year 1992 the Bank was permitted to extend direct financial assistance to public agencies. The Bank also formulated certain guidelines for extending financial assistance to projects covering slum redevelopment and low cost housing for the poor and slum dwellers (EWS and LIG) both in urban and rural areas. A special fund has also been created out of the proceeds of the Voluntary Deposit Scheme, 1991 for this purpose. Public Agencies including local bodies both in urban and rural areas who can borrow from financial institutions are eligible to avail themselves of financial assistance under the scheme. The repayment period for the same is maximum of 15 years from the date of release of first installment.

NHB has so far sanctioned 309 projects under its various project finance schemes both direct as well as through the refinance window. These projects have a cost component of Rs. 1494.41 crore and a loan component of Rs. 933.98 crore. Out of these 309 projects, refinance assistance was provided to 218 projects from the General Fund whereas refinance assistance to 10 projects was provided under the Special Fund. During the year 2000-01,however, no refinance assistance was provided under project finance schemes. The Bank provided direct financial assistance to the tune of Rs.69.42 crore during the current year (including the amount lent from the Special Fund). Cumulatively, till the end of June, 2001, NHB has disbursed Rs.402.32 crore under its direct financing window. Brief details of direct financial assistance provided by the Bank under the General Fund and the Special Fund are given below:

A. General Fund
Out of the general fund, NHB disbursed a sum of Rs.42.05 crore directly, to the eligible institutions engaged in Land Development and Shelter Projects and Housing Infrastructure Projects during the year 2000-01. The cumulative disbursal under this head is Rs. 104.69 crore so far in respect of 26 projects spreading over the states of Tamil Nadu, Rajasthan, Himachal Pradesh, West Bengal, Gujarat and Goa. These projects have a total project cost of Rs. 638.43 crore and loan component of Rs. 288.55 crore.

B. Special Fund
So far, 55 projects with an outlay of Rs.160.09 crore and loan component of Rs. 102.91 crore have been approved in the states of Andhra Pradesh, Madhya Pradesh, Rajasthan and Gujarat out of the Special Fund. Cumulatively, Rs. 51.87 crores have been disbursed so far including Rs. 27.37 crores during the current year

4.3 Asset-Liability Management
The Bank has an Asset Liability Management Committee (ALCO) which met twice during the year to review liquidity and interest rate risks in terms of the operational guidelines issued by Reserve Bank of India in December, 1999. The Bank has been preparing liquidity gap statement for liquidity risk management and interest rate sensitivity statement and these statements are submitted to the Board and the Executive Committee of the Directors at regular intervals.