National Housing Bank (NHB): A Critical Overview
by Yuvi K - December 16, 2023
National Housing Bank (NHB): A Critical Overview
The National Housing Bank (NHB) is an apex financial institution in India and was created in 1988. Set up under the National Housing Bank Act (1987), NHB is an organization that is wholly owned by the Reserve Bank of India (RBI). Its main objective is to operate as a finance institution and promote housing finance through various channels like refinancing, deposit taking, and fund mobilization. It also plays a vital role in developing and regulating the housing finance market in India. In this article, we will take a critical look at the National Housing Bank and its operations in India.
Mandate and Functions
NHB is mandated to promote the growth and development of the housing finance industry in India. As a statutory body, the bank is responsible for:
- providing refinance facilities for housing loans to member housing finance companies
- issues guidelines for licensing of housing finance companies
- grants approvals and sanctions diverse financial assistance
- manages the *Housing Development Fund (HDF)* and the *Home Loan Guarantee Scheme (HLGS)*
- implements and monitors the required regulations
- supervises the banking activities of the housing finance companies
- creates schemes and facilitate collaborations for the housing finance industry
(*Housing Development Fund – गृह विकास फंड| Home Loan Guarantee Scheme – गृह ऋण गारंटी योजना*)
Role in Promoting Housing Finance
NHB has taken various initiatives over the years to promote housing finance in India. The bank provides several schemes to assist individuals in various stages of house construction or purchase, such as:
- Loans for application forms under the *Pradhan Mantri Awas Yojana (PMAY)*
- Securalitization of loans of housing finance companies
- Refinancing of housing projects
- Banks loans to individuals
- Loans to housing finance companies
- Reduction in interest rates for home loans
- Investment in housing funds & trusts
- Loans to central and state governments for housing projects
- Cost cutting initiatives for the housing finance industry
(*Pradhan Mantri Awas Yojana (PMAY) – प्रधान मंत्री आवास योजना*)
Table: Different Types of Housing Loan Products from NHB
| Product | Margin | Loan Size | Qualifying Criteria |
|---|---|---|---|
| Reverse Mortgage Loan (RML) | Nil | Upto INR 2 lakh | Older than 60 years, minimum property worth Rs 20 lakh |
| Credit Linked Subsidy Scheme (CLSS) | Nil | Upto Rs 6 lakh | Household income upto Rs 18 lakh per annum |
| Cost Plus Home Loan (CPHL) | Upto 5% | Upto Rs 5 crore | Disbursed through member housing finance companies |
| Rural Housing Loan (RHL) | Upto 5% | Upto Rs 2 lakh | Agriculturists & those who have land or buildings in a rural area |
The above information shows that NHB plays a major role in providing housing finance and in creating affordable housing opportunities. It has taken several initiatives to reach out to people in the rural areas, and to provide more benefits to people in urban areas.
Conclusion
NHB is an important institution in India, as it plays an important role in providing funds and creating opportunities for the housing sector. Its various initiatives have led to the growth of the housing finance market, and it has been instrumental in providing people with easy access to housing finance. With its various schemes and regulations, NHB is an important source of financial assistance for individuals and housing finance companies.
NHB has indeed made a mark in the housing finance industry, and it continues to play an integral role in the sector. With the government’s continued support for the housing financing sector and its various initiatives, NHB will play an even more important role in driving growth and development in the housing finance sector.
References:
1. https://www.nhb.org.in/home
2. https://www.bankbazaar.com/nhb.html
3. https://www.investmentz.com/difference-between-nhb-and-hdfc-bank/
4. https://www.hdfc.com/npa/rural-housing-loan
