National housing bank
National Housing Bank (NHB), a Government of India owned entity, was set up on 9 July 1988 under the National Housing Bank Act, 1987. NHB is the apex financial institution for housing. NHB has been established with an objective to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions and for matters connected therewith. The Finance Act, 2019 has amended the National Housing Bank Act, 1987. The amendment confers the powers of regulation of Housing Finance Companies (HFCs) to the Reserve Bank of India.
NHB registers and supervises Housing Finance Companies (HFCs), keeps surveillance through On-site & Off-site Mechanisms and co-ordinates with other Regulators.
NHB has been established to achieve, inter-Alia, the following objectives:
- 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 regulate the activities of housing finance companies based on regulatory and supervisory authority 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.
- Regulation and Supervision of Housing Companies operating in India is one of the most important and foremost functions of this apex Institute, powers of which are derived from the National Housing Bank Act.
- Raising of Funds on large scale and onward refinancing to Housing Finance companies, Cooperative Banks and other housing agencies for onward lending to Individual and Infrastructure companies in Housing Segment.
- Ensure Housing Finance Companies meet regulatory Capital requirements as required by BASEL norms, have proper risk management framework in place, good governance practices, etc.
Role of National Housing Bank
National Housing Bank has a specific role that is inherited with the purpose behind its formation in the year 1988. Its major role and objectives are enumerated below:
- The first and foremost objective is to ensure the availability of adequate financing for Housing Infrastructure development as well as a seamless flow of liquidity to various Housing finance Institutes to ensure timely financing to various Income segments (Lower, Middle and Higher-Income group).
- Another important objective behind creation of this apex Institute is to ensure proper regulation and supervision of Housing Finance Companies operating in the Country, timely audit of them, ensuring their compliance with the relevant guidelines as well as ensuring the credit is made available by such organization at affordable rates to meet the objective of housing for all.
- Another important role National Housing Bank plays is in increasing the number of housing units in the country. To achieve this objective NHB plays a pivotal role in making available land for building Housing by acting as facilitator, ways, and means to enable companies in the Housing segment to raise funds as well as smoothening the entire function to bring in more efficiency and enhanced productivity.
The Housing and Urban Development Corporation Limited (HUDCO) is a central public sector undertaking under the ownership of Ministry of Housing and Urban Affairs, Government of India in India.
HUDCO started financing for development of infrastructures in 1989. The priority was giving for infrastructure facilities including projects in the sectors of drainage, electricity, water supply, sewerage, solid waste management and roads in the urban areas. Later the social infrastructure components like primary schools and play grounds, hostels for working women, healthcare centres, police stations and jails, courts, etc. received benefit of funding for low cost.
Objectives of HUDCO
- To undertake or finance, partly or wholly, the establishment of satellite or new towns.
- To offer finance for the long term for construction of houses for finance or residential purposes or undertake housing and urban development programmes.
- To subscribe to bonds and debentures which are issued by the State Housing (or/and Urban Development) Boards, Development Authorities, Improvement Trusts, etc., especially for financing urban development and housing projects.
- To undertake or finance the establishment of industrial enterprises of construction material.
- To keep a track of the money received from the Government of India and other sources in the form of grants or otherwise, in regular intervals, for the purpose of undertaking or financing the housing and urban development projects in the country.
- To establish, collaborate, promote, assist and provide consultancy services for the designing and planning projects of work related to Housing and Urban Development programmes in India and other countries.
- To undertake the business of Venture Capital Fund in Housing and Urban Development Sectors assisting in innovations in the sectors and subscribe to or invest in the shares/units of Venture Capital Funds which are promoted by Government Agencies/Government in the areas.
- To establish the Mutual Fund of HUDCO for Housing and Urban Development programmes and/or subscribe to and/or invest in the units of Mutual Funds which are promoted by the Government Agencies/Government.
HUDCO Loan Products
The housing finance loans are segregated into 3 categories:
The ultimate beneficiaries of the social housing finances are the borrowers who belong to the Economically Weaker Sections of the society and the LIG.
Residential Real Estate
The ultimate beneficiaries under the residential real estate financing are the public sector borrowers who use the finance for commercial and housing real estate projects which also includes land acquisition. These commercial and housing real estate projects are primarily for the high-income and middle-income groups of the society.
The residential and social real estate is financed by lending money to the State Governments and their agencies (which include rural housing boards, state housing boards, development authorities, slum clearance boards, and Municipal Corporations). These parties further extend the money to other parties or use them for the ultimate beneficiaries.
Under the umbrella of HUDCO Niwas or the retail finance product, (a) housing loans are provided to the individuals for the purchase of flats and houses, construction of houses, co-operative housing societies of government employees/for the purchase of plots from the government agencies, the improvement and extension of existing flats and for refinancing the existing loans from banks and other financial institutions and (b) bulk loans are provided to the State Governments, PSUs, agencies in order to compete with the demand of the house building advance of the public/employees, including HFCs for housing loan for the general public.
Urban Infrastructure Finance
Urban infrastructure finance is categorised into transport and roads, water supply, emerging sectors, power, area development, social infrastructure, commercial infrastructure, and others, and drainage and sewerage.
Under the category of water supply, water-related projects like rehabilitation projects and amplification of existing supply, un-serviced areas and quality are financed.
Roads and Transport
Roads, ports, railways, bridges, airports and the purchase of buses are financed under roads and transport.
Power generation (wind, hydro, solar, thermal, and biomass-based), distribution systems, and transmission are financed under power.
Special Economic Zones (SEZs) industrial infrastructure, gas pipelines, projects of the telecom sector, and oil terminals are financed under the emerging sector.
Commercial Infrastructure and Others
Market complexes, shopping centres, hotels, malls-cum-multiplexes, and office buildings are financed under this category.
Social Infrastructure and Area development
Health, infrastructure projects (like health centres, hospitals, schools, and other institutions, parks, and community centres), education, integrated area development schemes (like the development of urban extensions, new towns, and growth centres), and the basic sanitation projects are financed under this category.
Sewerage and Drainage
New schemes, rehabilitation projects, and augmentation related to drainage, solid waste management, and sewerage are financed under this category.
Consultancy services are provided in the area of urban development and housing. HUDCO’s consultancy services include providing services for the government programmes and advocating them on regional and urban planning, development and design, social development and environmental engineering.
The housing and urban development corporation limited is appointed by the Government of India. The consultancy services are also provided to other clients on request. For the service, terms of reference are prepared which outline the time schedules, project requirements, and the details related to the stage-wise payment. After the entire process, a formal agreement is initiated for undertaking the consultancy service.