Housing Finance and Nhb

8/4/2019 Housing Finance and Nhb

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PRESENTATION ONHOUSING FINANCE

PRESENTED BY:VARUN JAINIQBAL SINGH


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HOUSING FINANCE

Shelter being one of the three basic human needs, every human

being aspires to own a home. The basic objective of the UNConference on Environment and Development, 1991, is toachieve adequate shelter for all, especially the deprived urban &rural poor, through an enabling approach to the development &

improvement of shelter that is environmentally sound.

The concept of Housing Finance was pioneered by HousingDevelopment Finance Corporation (HDFC) in October 1977.HDFC is the market leader with 21% share in the housingfinance market. It was not only a trend-shelter for housingfinance in whole Asian continent, but also built up the industryby setting rules, policies & procedures to protect the interests ofcustomers.


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Housing Finance is a business of financial intermediation

wherein the money raised through various sources such as publicdeposits(acc. To NHB), institutional borrowing(from banks),refinance from NHB and their own capital, is lent to borrowersfor purchasing house. These intermediaries lend money byaccepting mortgage by deposit of title deeds of residentialproperty. The players in this industry continue to be housing-finance companies (HFCs) and commercial (local as well asforeign) banks.


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Role of Housing Finance in Economy

Housing Finance is one of the Top Employment generatorsfor economy.

Its helps to boost in the whole economy through generation

of demand(housing).

It has linkages with over 250 industries, including such coreindustries like cement, steel, timber, tiles etc.


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Measures related to Housing Sector in India

The National Housing and Habitat policy(NHHP) wasformulated in 1998 and stressed on :

Removing legal, financial & administrative barriers forfacilitating access to loans, finance & technology.

Providing quality and cost-effective shelters, especially to poorpeoples.

The National Urban Housing & Habitat Policy, 2007,while focusing on urban shelters, to meet the revenuerequirements of urban housing & infrastructure usinginnovative tools.


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To improve the habitat conditions in the rural areas, variousrural housing like:

Rajiv Awas Yojana(2010-2015): make the country slum free.

Indira Awas Yojana(1985-86)

Jawahar Rozgar Yojana(1989)

Golden Jubilee Rural Housing Finance(1997-1998): toprovided improved living conditions to rural areas.

Bharat Nirman: construction of 60lakh houses in rural areas.

Rural Housing Fund : a sum of rs. 2200 crore has beenallocated from the short falling of commercial banks.


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Housing Finance Institutions(HFIs)

There are different types of institutions for housing in Urban &

rural areas. They are:

Scheduled Commercial Banks

Scheduled cooperative banks(district cooperative banks & urbancooperative banks)

Regional Rural Banks

Agriculture and Rural Development banks

Housing Finance Companies

National Cooperative Housing Federation of India


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Types of Housing Loans

Home equity loan: finance to customers by way of mortgage

of existing property to financier for taking a loan for someother purpose.

Home-extension loans: is extension of the existing houses

like addition of rooms, toilet facilities and so on.

Home-improvement loans: these loans are provided mainlyfor repairs and maintenance of existing house.

Home-Purchase loans

Land purchase loans

Loan to NRIs


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The loan amount generally depends on:

The period for which the loan is needed

The repayment capacity of the borrower

The estimated value of property

Deeds of borrower

The rate of Interest on these loans depends on a number offactors, such as tenure of loan, loan amount, purpose of loan,

repayment capacity of borrowers & the cost of fund of thefinancier.


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NATIONAL

HOUSING BANK


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NATIONAL HOUSING BANK ( NHB )

NHB was established on July 9 1988 under the NHB Act 1987 . NHBis fully owned subsidiary of RBI. The main office of NHB is in Delhi.

NHB is apex level financial institution for housing sector. It was

setup to organise the sector of Housing finance in the country .

Its basic functions were to operate as a principal agency to promotehousing finance institutions (HFIs) at both local and regional levelsand to provide financial and other support to them.

.HFIs include those institutions which have one of theirprincipal object of their business of providing finance forhousing purpose . Institution might be incorporated or not.


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The National Bank is a body corporate. It can establish

offices/branches /agencies at any place in India and with theRBI's approval outside India.

ItsAuthorized and paid-up capital is Rs 350 crore, which is fullysubscribed the RBI. The authorized capital can be increased up to

Rs 2,000 crore by the Government with the RBI approval .

OBJECTIVES OF NHB

To promote sound and cost-effective housing system by

amalgamating the housing finance system with the overallfinancial system.

To encourage a network of dedicated housing finance institutions(HFIs) to adequately serve different income groups.


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To extend resources for the real state sector, channelizing them

further to housing.

To make housing finance/home loans affordable and within themeans of common man.

To regulate the activities of housing finance companies (HFIs)based on regulatory and authority provided under the Act.

To increase the supply of housing property and building materials,thereby upgrading the housing stock in the country.


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ROLE OF NHB IN HOUSING FINANCE

REGULATIONS AND SUPERVISION OF HFCs : NHBregulates the housing finance sector under the provision of NHB act1987 to prevent the affairs of any HFIs conducted in a manner

which is likely to cause harm to depositor .For this purpose NHBhas given directions to HFIs and their auditors .

Beside this NHB has also set guidelines for Asset liabilitymanagement , deposit acceptance activities and prudential

norms relating to capital adequacy ,asset qualification andprovisioning for bad and doubtful debts.


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PROJECT LENDING :The National Housing Bank providesfinancial assistance for project lending to a range of borrowers both in

the public and private sector. The eligible agencies for lending are:

Public Agencies :State Housing Boards/Improvement TrustsState Slum Clearance Boards/Authorities

Municipal Corporations/CouncilsNew Town Development AgenciesLocal Authorities for Housing & Urban Development

Private sector institutions :Microfinance Institutions/Self Help Groups/NGOs/Societiesregistered under the Societies Act, 1860 .

Financing Varies between 65 to 100 % of the project cost for amaximum of 15 years


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REFINANCING: HFIs provide loans to individual , builder ,corporate house and so on for construction , purchase or

repair of the house .With the objective that providing long termfunds to these institutions and individual ( builder , corporatehouse) by HFIs NHB extend refinance in respect of loan tothem.

NHB Provides refinance to Special HFIs , Rural developmentBank , scheduled state cooperative bank and so on.

Refinance for Rural housing is provided at concessional rateof 8% per annum for 7 years.

Paying off an existing loan with the proceeds from a new loan,usually of the same size, and using the same property as collateral.


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Promotion and Development Function : NHB framesreviews and modify guidelines for HFCs for their sound and healthygrowth .All HFCs registered with the NHB under the Act NHB 1987are eligible for refinance support.

POWERS OF NHB UNDER THE ACT NHB 1987

Promoting, supporting in the establishment of housing financinginstitutions ( HFIs)

Issue directions to HFIs to ensure their sound growth.

Making of loans and advances and financial assistance for housingactivities to HFIs, banks, state cooperative, agricultural and ruraldevelopment banks .


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Organizing training programmes/seminars on matters

relating to housing

Formulating scheme for the economically weaker sections ofsociety .

Undertaking research and surveys on constructiontechniques and other studies relating to housing .

Providing technical/administrative assistance to HFIs .


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THANK YOU

Documents

Housing Finance and Nhb