National Housing Bank (NHB)

NHB (National Housing Bank) is the apex institution for the regulation and supervision of housing finance companies operating in India. NHB was promoted by the Reserve Bank of India in July 1988 as its wholly owned subsidiary through an act of Parliament. It was set-up with the objective of promoting housing finance institutions and paying focused attention on the housing finance sector, which was hitherto not given adequate importance resulting in huge gap between the demand and supply of housing stock. Currently, its paid up capital is 350 crore.

Organisational Structure of NHB

NHB is headed by a full time Chairman and Managing Director, supported by Executive Directors, Head of Departments and other Officers under them. A high powered Board of Directors comprising of Directors nominated by the Reserve Bank of India, top Government officials and eminent independent professionals guide the affairs of NHB. National Housing Bank’s Head Office is in New Delhi. It has a regional office in Mumbai and Representative offices in Hyderabad, Bengaluru, Chennai, Kolkata, Lucknow, Ahmedabad, Bhopal, Patna, Nagpur and Bhubaneswar.

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Objectives of NHB

  1. Creation and development of a thorough, robust, sustainable and proficient housing finance system, capable of creating to the needs of vaious strata of the society.
  2. Launching appropriate channels of housing finance with a view to serve population belonging to different geographical areas and income levels.
  3. Encouraging saving for diverting them towards housing finance sector.
  4. Ensuring housing within the reach of common people, by making them less expensive.
  5. Making suitable use of technologies in the housing sector.
  6. Ensuring uninterrupted availability of land and building materials for the smooth development of housing sector.
  7. Empowering public agencies to act as the suppliers of land and dacilitators of their serving.
  8. Reinforcing the backward and forward linkages of the housing sector with other parts of the economy.
  9. Making an attempt to increase the financial resources for the housing finance sector.
  10. Emplowering the housing finance sector, as part of its efforts to increase the financial resources for the sector, to have an easy access to the capital market.

Role and Rationale of NHB

  1. Promotional Function: Facilitating the setting-up of local and regional players in housing finance sector was intended to minimize the gap between the demand and supply of home loans, which was huge at the time NHB was established in July 1988. Consequent upon the emergence of NHB as the apex housing institution in the sector, a number of specialized financial institutions have appeared on the scene, Which exclusively offer housing finance products that are tailor-made to cater the needs of various segments of the society.
  2. Regulatory Functions: Regulation of the housing finance market and various institutions operating therein is another significant function as well as responsibility of NHB. Of late, NHB’s role as the regulator has assumed more importance in view of the further development of the housing system as it seeks integration with the debt and capital markets. The responsibility of ensuring a dependable and steady housing finance system also lies with NHB.
  3. Financing Function:National Housing Bank’s role as the apex refinancing body for the banks and other institutions associated with housing finance activities is yet another importance area. The NHB’s programmes are designed with the emphasis on association of different primary lending institutions, in a big way, to act as exclusive channels for immunity of housing finance.
  4. Asset Secularization: Securitisation of mortgaged loans has been considered by National Housing Bank as a viable and practical solution for the creation of large amount of resources for housing sector. Appropriate step have been taken by NHB to facilitate and encourage the mortgage securitisation.