National Housing Bank

Table of Contents

The National Housing Bank (NHB) is the apex financial institution for housing in India.
NHB operates as a principal agency to promote housing finance institutions both at local & regional levels and to provide financial and other support to such institutions.
It does not extend direct credit at individual level but extends indirect financial assistance by way of refinance (i.e., NHB finances those institutions which provide finance to individual borrowers, builders etc.)
Head Office : New Delhi.
Regulation: NHB is regulated by the RBI. Earlier, NHB regulated the activities of Housing finance companies (HFCs) based on regulatory and supervisory authority derived under the NHB Act 1987, but now RBI does it.
Earlier the National Housing Bank was a wholly owned (100%) subsidiary of RBI. But in 2019, Govt. of India took over the entire stake of NHB from RBI.

Housing finance companies (HFCs)

Housing finance companies (HFCs) are a category of NBFCs and till 2019, HFCs were regulated by National Housing Bank (NHB). But after 2019 HFCs have come under the direct regulation of the RBI. This may have been done because of the bankruptcy issues going on in various housing finance companies like DHFL.

Background and Establishment

Originally the idea of the National Housing bank was proposed by the Sub-Group on Housing Finance for the Seventh Five Year Plan (1985-90). Government set up a committee under the chairmanship of Dr. C. Rangarajan, the then Deputy Governor, RBI to examine the proposal.
The committee recommended the setting up of the National Housing Bank as an autonomous housing finance institution.
Statutory Body: NHB was set up on July 9, 1988 under the National Housing Bank Act, 1987.
Initially, Reserve Bank of India contributed the entire paid-up capital.
Current Position:
- As per the amendments to the National Housing Bank Act, 1987, in line with the Union Budget 2019–20 announcements, the regulatory powers of NHB over Housing Finance Companies (HFCs) — including registration and supervision — were transferred to the Reserve Bank of India (RBI). This change came into effect on August 9, 2019.
- The authorized capital of NHB currently stands at ₹1,450 crore, which is entirely subscribed by the Government of India.

Objectives

NHB has been established to achieve the following:

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 to adequately serve various regions and different income groups.
To augment resources for the sector and channelise them for housing.
To make housing credit more affordable.
To supervise the activities of housing finance companies based on supervisory power derived under the Act.
To encourage augmentation of supply of buildable land and also building materials for housing and to upgrade the housing stock in the country.
To encourage public agencies to emerge as facilitators and suppliers of serviced land, for housing.

NABARD is the backbone of rural development in India. From credit disbursement and microfinance to infrastructure creation and sustainable agriculture, its interventions touch every aspect of rural life. As India progresses toward its goal of doubling farmers’ income and achieving inclusive growth, NABARD’s role remains more critical than ever.

FAQs

1. What is the National Housing Bank (NHB)?

The National Housing Bank is the apex financial institution in India for housing, established in 1988 to promote housing finance institutions and improve access to housing finance.

2. Who owns the National Housing Bank?

As of now, the NHB is 100% owned by the Government of India. The Reserve Bank of India (RBI), which initially held the stake, transferred ownership to the central government in 2019.

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