NATIONAL HOUSING BANK

The National Housing Bank (NHB) is a specialized financial institution established in 1988 under the National Housing Bank Act, 1987. It functions as the apex institution for housing finance in India, aiming to promote housing finance institutions both at local and regional levels and provide financial and other support to such institutions.

Objectives of NHB

1. Promotion of Housing Finance Institutions: To encourage the establishment and development of housing finance institutions.
2. Expansion of Housing Finance System: To develop a sound, healthy, viable, and cost-effective housing finance system.
3. Housing and Infrastructure Development: To promote and regulate housing and infrastructure development.
4. Financial Stability: To ensure the financial stability of the housing finance system.
5. Affordable Housing: To promote affordable housing for all segments of society, particularly low and moderate-income households.

Key Functions of NHB

1. Refinance Facility
   • NHB provides refinance support to banks, housing finance companies (HFCs), and other financial institutions for their housing finance activities. This helps these institutions extend more home loans to individuals and developers.

Example:

1. Institution: ABC Housing Finance Company
2. Loan Amount: ₹100 crore
3. Purpose: Refinance for home loans to middle-income households
4. Outcome: ABC Housing Finance Company receives refinance from NHB, enabling it to provide affordable home loans to middle-income families, increasing homeownership.
5. Direct Finance
   • NHB offers direct finance to public agencies, developers, and housing finance institutions for housing and urban infrastructure projects.

Example:

2. Project: Affordable Housing Project
3. Location: Hyderabad, Telangana
4. Loan Amount: ₹50 crore
5. Outcome: NHB provides direct finance to a developer for constructing affordable housing units, contributing to the availability of low-cost housing for economically weaker sections.
6. Project Finance
   • NHB provides project finance for housing and infrastructure development projects, including land development, housing construction, and urban infrastructure.

Example:

3. Project: Urban Infrastructure Development
4. Location: Pune, Maharashtra
5. Loan Amount: ₹200 crore
6. Outcome: NHB finances an urban infrastructure project, leading to improved urban facilities and better living conditions in the area.
7. Capacity Building and Training
   • NHB conducts training programs, workshops, and seminars for housing finance professionals to enhance their skills and knowledge.

Example:

4. Training Program: Housing Finance for Emerging Markets
5. Participants: Housing finance professionals from various HFCs
6. Outcome: Participants gain insights into innovative housing finance models and best practices, improving their ability to serve the housing finance market effectively.
7. Regulatory Role
   • NHB regulates and supervises housing finance companies to ensure their financial stability and compliance with regulatory norms.

Example:

5. Institution: XYZ Housing Finance Company
6. Action: Regulatory inspection and compliance check
7. Outcome: NHB ensures XYZ Housing Finance Company adheres to regulatory standards, promoting financial health and consumer protection in the housing finance sector.
8. Housing Microfinance
   • NHB promotes housing microfinance initiatives to extend housing finance to low-income households and informal sector workers.

Example:

6. Program: Housing Microfinance for Slum Dwellers
7. Location: Mumbai, Maharashtra
8. Loan Amount: ₹10 crore
9. Outcome: NHB supports a microfinance institution in providing small loans to slum dwellers for housing improvements, enhancing their living conditions.
10. Climate-Resilient Housing
    • NHB encourages the development of climate-resilient housing projects to mitigate the impact of climate change on housing.

Example:

7. Project: Green Housing Initiative
8. Location: Coastal areas of Odisha
9. Loan Amount: ₹30 crore
10. Outcome: NHB funds a project for constructing climate-resilient homes, improving the resilience of communities to climate-related hazards.

Key Schemes and Initiatives of NHB

1. Rural Housing Fund (RHF)
   • Provides funds to financial institutions for lending to rural households for housing purposes.

Example:

1. Project: Rural Housing Loans
2. Location: Bihar
3. Loan Amount: ₹25 crore
4. Outcome: Financial institutions receive funds from RHF to extend housing loans to rural households, promoting rural housing development.
5. Urban Housing Fund (UHF)
   • Provides finance for affordable housing projects in urban areas, targeting low and middle-income groups.

Example:

2. Project: Affordable Apartments in Urban Areas
3. Location: Delhi
4. Loan Amount: ₹75 crore
5. Outcome: NHB’s UHF supports the development of affordable apartments, making housing more accessible for urban low and middle-income families.
6. Credit Linked Subsidy Scheme (CLSS)
   • Part of the Pradhan Mantri Awas Yojana (PMAY), CLSS provides interest subsidies on home loans for economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG).

Example:

3. Beneficiary: EWS Household
4. Loan Amount: ₹5 lakh
5. Subsidy Amount: ₹2 lakh
6. Outcome: The household receives a subsidy on their home loan, reducing the financial burden and enabling them to purchase a home.
7. NHB Residex
   • An index that tracks the movement of residential property prices across India, providing valuable information for stakeholders in the housing sector.

Example:

4. City: Bangalore
5. Outcome: Real estate developers and buyers use NHB Residex data to make informed decisions regarding property investments and pricing.
6. Golden Jubilee Rural Housing Refinance Scheme
   • Provides refinance to banks and HFCs for extending loans to individuals in rural areas for housing construction or improvement.

Example:

5. Beneficiary: Rural Household
6. Loan Amount: ₹3 lakh
7. Purpose: Construction of a new house
8. Outcome: The household receives a loan through a bank refinanced by NHB, enabling them to build a new home in a rural area.

Summary

The National Housing Bank (NHB) plays a crucial role in promoting and regulating housing finance in India. Through its refinance, direct finance, project finance, and regulatory functions, NHB supports the growth and development of the housing sector. Key schemes like the Rural Housing Fund, Urban Housing Fund, and Credit Linked Subsidy Scheme help promote affordable housing for various segments of society. NHB’s initiatives in capacity building, housing microfinance, and climate-resilient housing further contribute to the overall development of the housing sector, ensuring better living conditions and financial inclusion for all.