Background of National Housing Bank
The government of India, in its 7th 5 year plan (1985 – 90) identified that the availability of long term finance to individual households is poor. Hence, a recommendation was made to the effect that national level institutions be set up to remove all the lacuna in the long-term financing of the housing sector. Thereafter, a Committee of Secretaries headed by Dr. C Rangarajan was set up and the National Housing Bank or NHB was set up based on its recommendations.
About the National Housing Bank
NHB is a statutory body that has been set up by the Parliament. NHB is wholly owned by the Government of India post the 24 April 2019 notification of RBI i.e. the entire paid-up capital of NHB is held by the government. The Head office of NHB is at New Delhi. The general superintendence, direction and management of the affairs and business of NHB vests in its Board of Directors.
Objectives of NHB
Its listed objectives are briefly, as follows – - 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 and supervise their activities. - To augment resources for the sector and channelise them for housing. - To make housing credit more affordable. - To encourage public agencies to emerge as facilitators and suppliers of serviced land, for housing.
Functions of NHB
The main functions of NHB include – - Supervision and grievance redressal regarding Housing Finance Companies (the regulation of HFCs however, vests with RBI). - Ensures that Housing Finance Companies meet regulatory Capital requirements as required by BASEL norms, have proper risk management framework in place, good governance practices, etc. - Financing in the form of extending refinancing options to primary lenders and lending directly with respect to projects undertaken by public housing agencies. - Promotion and Development.
Benefits of NHB
- There is an exclusive institution that focuses on housing finance infrastructure making it easy to avail refinancing options.
- It also acts as a guaranteeing institute for small Housing finance companies that are unable to raise funds from the market.
- Provides expertise in underwriting housing finance.
- Helps in the creation of housing stock and facilitates construction of new houses.
