National Housing Bank Annual Report 2010-2011

7/29/2019 National Housing Bank Annual Report 2010-2011

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website : ww w.nhb.org.in

National Housing Bank

Annual Report2010-2011


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j k"V h;v ko kl c SadNATIONAL

HOUSING BANK

v kj - o h- o e kZv / ; { k , o a i zc U/ k f u n s' kd

R. V. VermaChairman & Managing Director

Hkkj r h; f j t o Zc Sad d ksj 5 & , b af M ; k g Sf c V sV l saV j ] y ks/ kh j ksM +] u b Zf n Y y h& 1 1 0 0 0 3d sl ai w. kZL o kf e Ro e sa n wj Hkk"k l h- 0 1 1 & 2 4 6 4 2 7 2 2 i hc h, D l 0 1 1 & 2 4 6 4 9 0 3 1 & 3 5 Q SD l %0 1 1 & 2 4 6 4 9 0 3 0

r kj %f u o kl c Sad b Z& e sy %[email protected] owned by Core 5-A, India Habitat Centre, Lodhi Road, New Delhi-110003Reserve Bank of India Phone : (D) 011-2464 2722 (PBX) 011-2464 9031-35 Fax : 011-2464 9030

Gram : NIWAS Bank email : [email protected]

^^c Sad f g Un h e sa i = kp kj d k L o kx r d j r k g S**

No. NHB (ND)/CMD/12590/2011-12

Date : September 12, 2011

The Secretary,Government of India

Ministry of Finance,Department of Economic Affairs,North Bock,New Delhi - 110 001

Dear Sir,

In accordance with the provision of sub-section(5) of Section 40 of the National HousingBank (Amendment) Act 2000, I forward herewith a copy of the Annual Accounts of the

National Housing Bank for the year 2010-11.

Yours faithfully,

(R.V. Verma)

Encls: Annual Accounts in bilingual format

Letter of Transmittal

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j k"V h;v ko kl c SadNATIONAL

HOUSING BANK

v kj - o h- o e kZv / ; { k , o a i zc U/ k f u n s' kd

R. V. VermaChairman & Managing Director

Hkkj r h; f j t o Zc Sad d ksj 5 & , b af M ; k g Sf c V sV l saV j ] y ks/ kh j ksM +] u b Zf n Y y h& 1 1 0 0 0 3d sl ai w. kZL o kf e Ro e sa n wj Hkk"k l h- 0 1 1 & 2 4 6 4 2 7 2 2 i hc h, D l 0 1 1 & 2 4 6 4 9 0 3 1 & 3 5 Q SD l %0 1 1 & 2 4 6 4 9 0 3 0

r kj %f u o kl c Sad b Z& e sy %[email protected] owned by Core 5-A, India Habitat Centre, Lodhi Road, New Delhi-110003Reserve Bank of India Phone : (D) 011-2464 2722 (PBX) 011-2464 9031-35 Fax : 011-2464 9030

Gram : NIWAS Bank email : [email protected]

^^c Sad f g Un h e sa i = kp kj d k L o kx r d j r k g S**

No. NHB (ND)/CMD/12591/2011-12

Date : September 12, 2011

The Governor,Reserve Bank of India,

Central Office, 18th Floor,Shahid Bhagat Singh Road,Mumbai - 400 023

Dear Sir,In accordance with the provision of sub-section(5) of Section 40 of the National HousingBank (Amendment) Act 2000, I forward herewith a copy of the Annual Accounts of the

National Housing Bank for the year 2010-11.

Yours faithfully,

(R.V. Verma)

Encls: Annual Accounts in bilingual format

Letter of Transmittal

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R.V. VermaChairman & Managing Director

Management of National Housing BankBoard of Director

(As on September 6, 2011)Under Section 6 of the National Housing Bank Act, 1987

Dr. Errol D'Souza Vidyadhar K. Phatak R.V. Shastri Jayshree A. Vyas

Directors Appointed underSection 6 (1) (b) of NHB Act, 1987

Directors Appointed underSection 6 (1) (c) of NHB Act, 1987

H.R. Khan Lakshmi Chand

Directors Appointed underSection 6 (1) (d) of NHB Act, 1987

Arun Kumar Misra

Directors Appointed underSection 6 (1) (e) of NHB Act, 1987

Alok Nigam Sanjay Kumar Rakesh

G.S. Sandhu K. Phanindra Reddy

Directors Appointed underSection 6 (1) (f) of NHB Act, 1987

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M anagem ent of Nati onal Housing Bank Executi ve Com mi ttee of Di rector s(As on September 6, 20 11)

Audit Committee of the Board(As on September 6, 20 11)

Remuneration Committee(As on September 6, 2011)

Risk Management Advisory Committee(As on September 6, 2011)

Board of Directors (As on September 6, 2011)Shri R.V.Verm a, ChairmanUnder Section 6 of the

Shri H.R. KhanNational Housing Bank Act, 1987Shri Lakshmi Chand

Section 6(1 ) (a) Shri R. V. Verma Shri Alok NigamChairman and Managing Director Shri Sanjay Kumar Rakesh

Section 6(1) ( b) Dr. Err ol D'Souza Shri R.V. Shastr i Professor, Economics Area,

Indian Institute of M anagement,AhmedabadShri Vidyadhar K. PhatakRetd. Principal Chief, Town and

Shri Lakshmi Chand, Chairm anCountry Planning Division,

Shri H.R. KhanMumbai Metropolitan Region

Shri Alok NigamDevelopm ent Authority

Shri Sanjay Kumar RakeshSection 6(1) (c ) Shri R.V. Shastr i

Ms. Jayshree A. VyasE x - C h a i r m a n & M a n a g i n g Shri Vidyadhar K. PhatakDirecto r, Canara BankMs. Jayshree A. Vyas

Managing Director, Shri MahilaSewa Sahakari Bank Ltd.

Section 6(1) ( d) Shri H. R. KhanShri H.R. Khan, ChairpersonDeputy Governor, Reserve Bank

Shri Lakshmi Chandof IndiaShri Alok NigamShri Lakshmi Chand, IAS (Retd.)Shri R. V. ShastriDirector - Central Board ofDr. Errol D'SouzaDirectors,

Reserve Bank of IndiaSection 6(1 ) (e) Shri Arun Kumar M isra, IAS

Secretary to the Government ofIndia,

Shri R. V. VermaMinistry of Housing & UrbanChairmanPoverty Alleviation

Shri Arnab RoyShri Alok Nigam, IASExecutive DirectorJoint Secretary to the

Shri V. R. IyerGovernment of India,General Manager, Oriental Bank of CommerceMin ist ry o f Finance

Shri K. RaghuramanShri Sanjay Kumar Rakesh, IASChartered Acco untant & Retired Banker

J o i n t S e c r e t a r y t o t h e Dr. Surinder Singh YadavGovernment of India,Head, Depar tment of Management Studies, IIT, DelhiMinis try of Rural Development

Shri R.S. GargSection 6(1) (f) Shri G. S. Sandhu, IASGeneral ManagerPr inc ipa l Secre ta ry to theShri V.K. BadamiGovernment of Rajasthan,General ManagerHousing/Urban DevelopmentShri R.K. PandeyDepartmentGeneral ManagerShri K. Phanindr a Reddy, IASShri A. P. SaxenaSecretary to the Government of

Deputy General ManagerTamil Nadu, Housing / UrbanDevelopm ent Departm ent

o k f " kZd f j i ksZV 2 0 1 0 & 1 1 ANNUAL REPORT 2010-11

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CONTENTSI. H igh ligh ts: 2010-11 115

I I. Global Economy: 2010-11 117

II.1 Strong Recovery amidst Economic Uncertainties 117

II.2 Financial Market Recovery 117II.3 Recovery expected to Strengthen 118

III. Domestic Economy: 2010-11 118

IV. Union Budget 2011-12 120

V. Resou rce M ob ilization 122

V.1 An Overview of the Market Position 122

V.2 Resources mobilised during the year 123

V.3 Sources of Funding 123

VI. D ep loym en t of Fu n ds 124

VI.1 Refinan ce Perform ance 124

VI.2 Project Finance Perform ance 125

VIII. Finan cial Perform ance: 2010-11 128

IX. Rura l Housing Finance 128

IX.1 Rural Housing Fund 128

IX.2 Golden Jubilee Rural Housing Finance Scheme 129

X. Eq u ity Particip ation 130

XI. Regula tion and Supervis ion 131

XI.1 Regulation of Housing Finance Companies (HFCs) 131

XI.2 Supervision of HFCs 131

XI.3 Important Notifications 132

XI.4 Revised KYC Guidelines, Anti Money Laun dering Measu res, Fair

Practices Code & Asset-Liability Management System 132

XI.5 Coord ination with Other Regulatory Authorities 132

XI.6 Other Activities 133

XII. Business Planning and Promotion Activities 133

XII.1 Complaint Redressal Mechanism 133

XII.2 Meeting with CEOs of HFCs and Senior Officials of PSBs including select RRBs 134

XII.3 World Habitat Day Celebrations 2010 134XII.4 Developmen t and Research Advisory Comm ittee 135

XII.5 Promotional Program me for Energy Efficient New Residential Hou sing in India 135

XII.6 Risk Management 136

XII.7 Regional Office/ Regional Representative Offices 136

XIII. Capacity Building 137

XIV. Corporate Commu nications 137

XV. Residential Mortgage Backed Securitization (RMBS) 138

XVI. New Initiatives 138

VII. Housing Micro Finance 126


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XVI.1 File Tracking System 138

XVI.2 Refinance Scheme for Promoting Energy Efficient Housing 139

XVII.Reverse Mortgage Loan 139

XVII.1 Reverse Mortgage Loan (RML) 139

XVII.2 Reverse Mortgage Loan enabled Annuity (RMLeA) 139

XVII.3 Reverse Mortgage Counselling Centres 140XVII I. In formation Technology In it ia tives 140

XVIII .1 Portals 140

XVIII.2 IT Projects 141

XVIII.3 Information Security 141

XIX. D evelop men t & Prom otion al In itiatives 142

XIX.1 Asia Pacific Union for Housing Finance (APUHF) 142

XIX.2 Stud y on H ousing Finance Portfolio of Schedu led

Commercial Banks Trend Analysis 2005-09 143

XIX.3 Stud y on Hou sing Finance Portfolio of Hou sing Finance Comp anies 145

XIX.4 Stud y on Affordable Housing and H ousing Finance in the State of Rajasthan 145XIX.5 Study on Impact Assessment of Rural Housing Fund 146

XIX.6 Study on the Impact Analysis of Housing Micro-Finance

(HMF) Assistance to MFIs 147

XX. Resident ia l Real Estate Pr ice Ind ices (NHB RESIDEX) 147

XX.1 Background 147

XX.2 NHB RESIDEX: Perform ance 148

XXI . In te rest Subsidy Scheme for Housing the Urban Poor (ISHUP) 151

XXI.1 Background 151

XXI.2 Subsequent Developments 151

XXII. 1p er cen t In terest Su b ven tion Sch em e 151

XXIII. Corp orate Govern an ce 152

XXIV. Human Resources 153

XXIV.1 Staff Strength & Recruitment and Promotions 153

XXIV.2 Training 154

XXIV.3 Business Review Conference for officers of the Bank 154

XXIV.4 Mentor Scheme 154

XXV. Rajbhasha 154

XXVI. Kn ow led ge Cen tre 156

XXVII . Awards and Recogn it ions 156XXVII.1 SKOCH Aw ard for Financial Inclusion 2011 for role in Rural Housing 156

XXVII.2 ADFIAP Award for Developm ent Finance-led Poverty

Alleviation 2011 for Rural Housing Finance 156

XXVII I. Fu tu re Ou tlook 157


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LIST OF ABBREVIATIONS


ACB : Aud it Committee of Board CPs : Comm ercial Papers

ADFIAP : Association of Development CRISIL : Credit Rating and Informat ion

Financing Institu tions in Asia Services of India Ltd.

and the PacificCRMC : Credit Risk Management

AGM : Assistant General Manager Committee

AIMA : A l l I n d i a M a n a g e m e n t CRR : Cash Reserve Ratio

AssociationCSO : C e n t r a l S t a t i s t i c a l

ALCO : Asset & Liability Committee Organization

AML : Anti Money Laundering DARPG : D e p a r t m e n t o f

Administrative Reforms andAPUHF : A s i a P a c i f i c U n i o n f o r

Public GrievancesHousing Finance

DR Site : Disaster Recovery SiteASSOCHAM : Associa ted Chambers of Commerce and Industry of EC : Executive Comm ittee

IndiaED : Execut ive Director

BCP : Business Con tinuity PlanEWS : Econom ically Weaker Section

BE : Bud get Estima teFDI : Foreign Direct Investment

BIRD : B u s i n e s s a n d I n d u s t r i a lFICCI : F e d e r a t i o n o f I n d i a n

Research DivisionChambers of Commerce and

CAB : College of Ag r icu l tu ra l Indust ry

Banking FTS : File Tracking System

CAGR : C o m p o u n d e d A n n u a lGDP : Gross Domestic Product

Growth RateGJRHFS : G o l d e n Ju b i l e e R u r a l

CBFIs : Community Based FinancialHou sing Finance Scheme

InstitutionsGJRHRS : G o l d e n Ju b i l e e R u r a l

CBI : Central Bank of IndiaHou sing Refinance Scheme

CEOs : Chief Executive OfficersGoR : Governm ent of Rajasthan

CERSAI : C e n t r a l R e g i s t r y o f HD FC Ltd : H o u s i n g D e v e lo p m e n tS e c u r i t i z a t i o n A s s e t

Finance Corporation LtdReconstruction and Security

HFCs : Hou sing Finance Compan iesInterest of India

HIP : Housing Information PortalCMD : Chairman & Managing Director

HMF : Housing MicrofinanceCoR : Certificate of Registrat ion

HO : Head OfficeCPGRAMS : C e n t r a l i z e d G r i e v a n c e

Redress and Mon i to r ing HUDCO : H o u s i n g a n d U r b a nSystem

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Develop m ent Corp oration Facility

LtdLIG : Low Income Grou p

HUFs : Hind u Un divided FamiliesMFIs : Micro Finance Institutions

IAS : I n d i a n A d m i n i s t r a t i v eMHUPA : Ministry of Housing & Urban

ServicesPoverty Alleviation

IBA : Ind ian Bank 's AssociationMIG : Midd le Income Group

ICAI : I n s t i t u t e o f C h a r t e r e dMIK : M o n g o l i a n M o r t g a g e

Accoun tants of IndiaCorporation

ICWAI : Institute of Cost and WorksMoU : M e m o r a n d u m o f

Accoun tants of IndiaUnderstanding

IDA : International DevelopmentMPLS : M u l t i P r o t o c o l L a b e l

AssociationSwitching

IFC : I n t e r n a t i o n a l F i n a n c e MRO : Mumbai Regional OfficeCorporation

MTs : Managem ent TraineesIIM : I n d i a n I n s t i t u t e o f

N-E Region : Nor th-East RegionManagement

NGO : N o n G o v e r n m e n t a lIIP : I n d e x o f I n d u s t r i a lOrganizationProduction

NHB : National Housing BankIIT : I n d i a n I n s t i t u t e o f

Technology NHB-AWE : NH B-Award Winning Essays

IMF : International Monetary Fun d NIBM : National Institute of Bank

ManagementISDN : Integrated Services Digital

Network NOF : Net Owned Fund

ISHUP : Interest Subsidy Scheme for NPV : Net Present ValueHou sing the Urban Poor

PLIs : Primary Lend ing InstitutionsISP : Information Security Policy

PPP : Public Private PartnershipIT : Information Technology

PSBs : Public Sector Banks

KDCMPUL : Kaira District Co-operative RAY : Rajiv Aw as YojanaM i l k P r o d u c e r s ' U n i o n

RBI : Reserve Bank of IndiaLimited

RC : Remu neration Committee ofKfW : K r e d i t a n s t a l t f r

DirectorsW i e d e r a u f b a u , G e r m a n

Development BankRHF : Rural Housing Fund

KYC : Know Your CustomerRM : Regional Man ager

LAF : L iq u i d i t y A d ju s t m e n tRMAC : Risk Management Advisory

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Committee SLBC : S t a t e L e v e l Ba n k e r s '

CommitteeRMBS : Residential Mortgage Backed

Securitization SLCC : State Level Coordination

CommitteeRML : Reverse Mortgage Loan

UN : United NationsRMLeA : Rever se Mor tgage Loan

enabled An nuity UNESCAP : United N ationsEconomic and

Social Commission for AsiaRO : Regional Office

and the PacificRRBs : Regional Rural Banks

UT : Union TerritoryRROs : Reg iona l Rep resen ta t ive

VCS : Video Conferencing Solut ionOffices

WAN : Wide Area NetworkSAHF : South Asia Housing Finance

Forum WEO : World Economic Outlook

SARFAESIAct : S e c u r i t i z a t i o n a n d WHD : World Habitat Day

Reconstruction of FinancialWPI : Wholesale Price Ind ex

Assets and Enforcement ofZCB : Zero Coupon BondSecurity Inter est Act

SBI : State Bank of Ind ia

SCBs : S c h e d u l e d C o m m e r c i a l

Banks

SEBI : Secur i t ies and Exchange

Board of India

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LIST O F TABLES

Table I : Refinance Disbursements

Table II : Refinance Disbursements to Rural Housing

Table III : Refinance Disbursements for Low & Moderate Size Loan

Table V : Golden Jubilee Rural Housing Finance Scheme: Performance during 2009-10 & 2010-11

Table VI : Golden Jubilee Rural Hou sing Finance Scheme: Cumu lative Performance

Table VII : NH B Residex-Percentage (per cent) change in different cities: City-wise grow th rate over the

previous quarter

Table VIII : NHB Residex: City-wise H ousing Price Index (Base Year: 2007 = 100)

Table IV : Project Finance Disbursements

LIST OF BOX ITEMS

Box I : Mortgage Risk Guarantee Fund Trust for Low Income Housing

Box II : Central Registry of Securitization Asset Reconstruction and Security Interest of India

(CERSAI)

Box III : Key Findings of the Study on NH B's Housing Micro Finance Programme (2007-2010)

Box IV : Genesis and Launch of the Asia Pacific Union for Housing FinanceBox V : Key Highlights of the Trend Analysis of Hou sing Finance Portfolio of SCBs 2005-09.

Growth in Hou sing Finance

Box VI : Key Findings of the Study on Rural Housing Fund (RHF)

Box VII : Need , Scope and Coverage of NHB RESIDEX

LIST OF CHARTS

Chart I : GDP Growth and Trend of Domestic Economy 2010-11

Chart II : Net Incremental Borrowing of NH B during 2010-11

Chart III : Borrowing Outstanding of NH B as on June 30, 2011Chart IV : Refinance Disbursements

Chart V : Trend of Refinance Disbursements 1999-2011

Chart VI : NH B Residex: City-wise Housing Price Index


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Owning a House, Dream of Mil lions of People

Housing - a basic human need and a dream of millions of people of India.

Housing Finance Makes home ownership possible for a vast majority of the

people resulting in expansion of the Housing market.

Housing Sector - a key contributor to the country' s economy on account of its

backward and forward linkages.

Nat ional Housing Bank Striving to develop a sound and sustainable housing

finance system in India, with the Bank' s Corporate Vision of promoting inclusive

expansion with stability in the housing finance market and creation of a

supportive market infrastructure through a range of financing and promotional

measures.

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National Housing Bank - Committed to the Cause of Affordable Housing for All

The year 2010-11 m arked a milest one for NHB, which crossed 12,000 crore loan disbursements

during a financial y ear. Of t his, approxim ately 50 per cent w ent t ow ards rural housing. Al so

approximat ely 35 per cent o f the refinance portfolio w as for loans upto ` 5 lakhs.

In it s journey of 23 years , the N at ional Housing Bank has led and cat alyzed t he grow th of t he

housing finance m arket in t he count ry. The housing finance sector has evolv ed through various

stages, wit h NHB as t he anchor instit ution.

'Affordable Housing for Al l' remains t he corporate goal of the Bank. Expansion w ith stabili t y

has been the underlying theme of NHB's programs and strategies. Bank, through its multi

funct ional role, is engaged in building the m ark et in frast ruct ure for the sect or's eff ici ent

funct ioning.

The housing finance system has evolved and steadily grow n t hrough v arious stages, wit h N HB

as the key policy inst itut ion at t he cent restage. Today , over 50 HFCs have a m ortgage loan

port fo lio o f over ` 1100 billion. The housing indust ry and a responsiv e housing credit sy stemcan potentially play an im portant role in stim ulating the local and the national economies and

in t he dist ribution of econom ic resources. "Scaling up" and Af fordability are key challenges

in the Sector and m arket-based solution w ill be most sustainable. NH B recognizes the strong

synergies in t he role of different play ers and st akeholders in the sector, and seeks t o promot e

effectiv e partnership th rough market infrastructure init iat ives.

W ith t he prim ary housing finance market growing over a period of t im e, there has been steady

expansion of credit flow int o the sector. How ever, there still exists a gap in fulfilling the

housing needs of the lower and moderate income households. Housing shortage in the low er

income segments is acute. A dedicated and sustainable approach is required to serve this

market segment.

Through its various promotional and financing initiatives, NHB is pursuing its Vision:

'Promot ing inclusive expansion w ith stability in t he housing finance market' and it s M ission:

'To harness and promot e the market pot entials t o serve the housing needs of all segment s of the

popula t ion w it h the focus on low and m oderat e incom e hous ing'.

NHB will seek to actualize its Vision through its focus on four broad areas of activ ities viz . (i) Financing,

(ii) Development of Market Infrastructure (iii) Expanding the scope of low and moderate income housing,

`

The Bank has adopted its Vision

And Mission

Promoting inclusive expansion with stability in the housing finance

market.

To harness and prom ote the market potentials to serve the housing needs

of all segments of the pop ulation w ith focus on low an d mod erate

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and (iv) Supervision of housing finance companies and the housing finance system. A s envisaged in

the NHB A ct, the Bank shall act on business principles with due regard to public interest.

While the Bank maintains a judicious balance of its various functions, the issue of Affordable

Housing for A ll is a challenge in respect of credit flow and pricing. Issues pertaining to land,

legislation, urbanization, finance, risk assessment and mitigation tools etc are some of the key issues

in the development and promotion of Affordable Housing market.

Role of market infrastructure and new mechanisms that can support the cause of home ownership

particularly for the low and moderate income segments, are clearly recognized. Penetration in these

market segments is still low and the right business model will include efficient financing, risk

mit igation, credit enhancement and specialist approach that can result in more innovative products.

Identify ing the demand in this market, meeting their credit requirements on acceptable terms, and

catalyzing the supply of housing construction at affordable prices are some of the key challenges.Though demands are huge, and the market is potent ially large, indiv idual transactions tend to be

small and geographically scattered, which can escalate costs.

The housing finance sector has enormous developmental impact in terms of social stability and

economic empowerment at the individual level and larger economic development at the sector level.

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National Housing Bank was set up under an Act of Parliament in 1988, as the apex development

housing finance institution. In its journey of more than 23 years, NHB has worked to build up the

capacity in the sector to address the housing needs for all segments of the population, with NHB' s

focus on low and moderate income households.

The Bank has been promoting inclusive expansion and stability in housing finance market. The

proactive policy support of NHB has expanded the reach and depth of Housing Finance Industry.

To supplement its regulatory role, N HB is also expanding its client base to reach all regions of the

country and serve all segments of the population. Recent initiatives of NHB, including CERSAI

(Central Registry supported by the Government of India) and NHB RESIDEX are steps towards

sustainable market infrastructure growth that will add to the transparency and robustness of the

market.

As its promotional charter, NHB is also supporting the cause of senior citiz ens through the Reverse

Mortgage Loan enabled Annuity (RMLeA) product.

NHB is hosting the Secretariat of Asia Pacific Union for Housing Finance (APUHF), a platform for

affordable housing in the Asia Pacific region.


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financial year 2011-12, interest subven tion housing finance. The porta l was plann ed toof 1per cent has been extended to include be implemented in three phases with thehousing loans upto 15 lakh, provided the first p ha se focus sin g on ind ivid u alcost of house does not exceed 25 lakh. bu yer / seller / ren ter of p rop erty, the

second phase on Investors & BusinessI.12 NH B continued its end eavour s to prom otePartners and the third phase on Policythe Reverse Mortgage Loan Scheme viz.

Makers & Professionals. All the threeRML and RMLeA - by w ay of Counseling phases have been completed. The contentsPrograms and Seminars to generatea r e n ow b e in g r e v ie w e d / u p d a t edawareness among senior citizens about theperiodically as per the review schedulescheme. During 2010-11, NHB organizedduring maintenance phase. The portal canand conducted 16 Seminars and openedbe accessed at www .housingind ia.info.three Cou nseling Centres for senior citizens

in various cities of India. Till June 30, 2011, a I.16 The Interest Subsidy Scheme for Housingtotal of ten Counselling Centres have been the Urban Poor (ISHUP) was launched byestablished by NH B in nine different cities the Ministry of Housing and Urban Povertyof the country. Alleviation, Govern m ent of Ind ia for

addressing the housing needs of EWS andI.13 NHB RESIDEX the residential propertyLIG segments of urban areas. Till June 30,

price Index launched by NHB in the year 2011 NHB as a Central Nodal Agency has2007 for tracking prices of residentialsigned Memorandum of Understandingprop erties in d ifferent parts of the coun try,with 33 prim ary lend ing institutions (PLIs)is presently being updated on a quarterlyconsisting of 20 Public Sector Banks, 2basis w ith its base year as 2007 for 15 citiesPrivate Sector Banks, 5 Regional Ruralof the coun try. Du ring the year 2010-11, theBanks and 6 Housing Finance CompaniesIndex was released for the quarters end edand received 190 interest subsidy claimsJune 2010, September 2010, December 2010from PLIs claiming 5.11 crore as Netand March 2011.Present Value (NPV) of interest subsidy

I.14 The scope of the regional network SAHF covering 6201 beneficiaries.(South Asia Housing Finance Union) was

I.17 In the Union Bud get announcement for theexpand ed to the Asia and Pacific region and

year 2011-12, the allocation under Ruralthe network was renamed as Asia PacificHousing Fund has been increased fromUnion for Hou sing Finance (APUHF). NH Bearlier ` 2000 crore in 2010-11 to ` 3000played a key role, in association with othercrore for th e year 2011-12. Fur ther , the limitinstitutions/ countries in the Asia Pacificof hou sing loans for lend ing und er priorityregion, in developing the Union as asector has also been enhanced from 20 lakhplatform to act as a knowledge sharing andto 25 lakh.networking med ium and promote coalition

and coordination among the Asia Pacific I.18 The Bud get 2011-12 has proposed to createcountries to facilitate exchange of ideas a Mortgage Risk Guarantee Fund un derand prom ote cross-learning amon g the Rajiv Aw as Yojana to enable prov ision ofcountries . NHB hosts the Secretariat for the credit to Economically Weaker Sections

APUHF . The first meeting of the Advisory (EWS) and LIG hou sehold s. NH B isBoard of the Union was held in November expected to play a vital role in man aging2010 and a Workshop on Hou sing Finance and adm inistering the proposed Fund.was organised during June 26-29, 2011 at I.19 The Government had facilitated setting upUlaanbator, Mongolia by APUHF in of Central Electronic Registry under theassociation with Mongolian Mortgage SARFAESI Act, 2002. This Registry hasCorporation (MIK), KfW and Frankfurt become operationa l since March 31, 2011.School of Finan ce & Managem ent.

I.20 Recognising the growing importance ofI.15 The Housing Information Portal (HIP) was Public Private Partnership in the present

launched in the year 2008-09 to serve as a economic scenario, the Bank has enteredreliable, single point source with updated into a partnership with Internationaland comp lete information on hou sing an d

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Fi n a n ce C o r p o r a t io n ( IF C) a n d strong signs of r ecovery in the wor stGovernment of Rajasthan (GoR) to prom ote affected econom ies. H ow ever, desp itelow and mod erate income housing in the stro ng recovery , the global econom ySta te o f Raja st h a n t h r ou g h jo in t continues to be affected by uncertainties inpar ticipation of the pu blic and the private the financial and the real sectors. The fearssectors in prom oting an HFC catering to of a global recession somew hat recededthis segment of the market. during the end of the year 2009 and the first

half of 2010. Resultantly, there was a spurtI.21 Under Golden Jubilee Rura l Housingin industrial production and trade whichFinance Scheme (GJRHFS), a total ofcontinued throu gh the first half of the year2,93,721 units were financed by HFCs and2010 and spurred consumption growth.PSBs un der the Scheme as against a target ofThe sus ta ined g rowth in economic3,75,000 units thus accounting for 78 peractivities through the year had somewhatcent achievem ent. Till March 2011, a total ofneu tralized the fears of a dou ble-dip global31,52,967 dw elling un its has been finan cedrecession.by the HFCs, Banks and Co-operative

sector institutions as against a target of II.1.2 Such recov ery ha s b een m ar ked by33,55,000 dwelling un its (app roximately 94 geographical d isparities. The econom icper cent of the target) du ring the period grow th has been relatively mod est in the

from 1997 to 2011. advanced economies owing to the severityof the imp act of the financial crisis on su chI.22 NHB was conferred the SKOCH Financialeconomies. On the other hand , theInclusion Aw ard 2011 for its intervention inemerging and developing economies haverural housing through the two dedicatedshown visible growth trends and lowSchemes viz. Golden Jubilee Rural H ousingunemployment rates. However, theseFinance Scheme and the Rural Housingeconomies have witnessed the gradualFund, which have demonstrated thewithdrawal of fiscal stimulus along withviability and su stainability of rural housingmonetary tightening to curb inflationaryfinance in the coun try.pressures mainly relating to supply-side

I.23 The Association of Development Financing bottlenecks in respect of food and fuel.Institutions in Asia and the Pacific

II.1.3 Amon gst the advanced economies, those in(ADFIAP) conferred on N HB the ADFIAP Asia have witnessed a stronger r ecovery inAward for Development Finance-led

comparison to their counterparts in thePover ty Alleviation for the year 2011.Euro Zone area and North America. With

The market mechanism to ensure supply of respect to the advanced and developingaffordable housing and housing finance as econom ies, those in Asia ar e at the forefrontcompared to demand is still far from fully followed by their counterparts in Africadeveloped. The rising population and rapid and East Europe. Despite the rebound inurbanisation are further putting an immense growth trends, the global economic

pressure on the housing stock in the urban areas conditions continue to remain volatileof the country. Present ly, about 30 per cent (328 owing to continued uncertainty about th emillion) of Indian population are living in urban resolution of the debt crisis in th e Euro Zonecentres and the estimated number is expected to

area.further rise to about 40 per cent by 2025. ThisII.2 Finan cial Mark et Recoveryrequires a concerted and proactive approach on

the part of all the stakeholders. II.2.1 Echoing p ositive econom ic sentim ents,global financial markets have exhibitedencouraging signs of recovery. While credit

I I.1 S tron g Recovery am id s t Econ om ic growth h as been somew hat sluggish in theUncertainties advanced economies, it has exhibited

buoyant trends in the emerging andII.1.1 A fallout of the global econom ic meltdowndeveloping econom ies particularly those inw h i c h s t a r t e d i n e a r l y 2 0 0 8 w a sAsia and Latin Am erica. Bank lend ing hastransformation in the global economiceased in mostparts of the w orld includ inginfrastructure. Remedial actions resu lted in

II. G lob al Econ om y: 2010-11


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the developed economies after a prolonged per the Janu ary World Economic Ou tlookperiod of tightened lending conditions. (WEO) Upd ate released by the IMF, global

growth is expected to reach 4.5 per centII.2.2 Though global capita l flows hav e recoveredduring 2011-12. Real GDP is expected tosharply from the lows they fell intoexpand by about 2.5 per cent in theimmediately following the crisis, they areadvanced economies and by 6.5 per cent inway below the levels reached during thethe emerging an d developing economies.

pre-crisis period. Prospects of robustgrow th and higher yields relative to II.3.2 Industry indicators are pointing toward s adeveloped economies have at tracted g r o w t h i n i n d u s t r i a l p r o d u c t i v i t y .c a p i t a l f l o w s f r o m t h e d e v e l o p e d Industrial growth is being propelled byeconomies into the emerging markets. On easing f inancing condi t ions , robustthe other hand, capital flow between the corporate performance and improvingdeveloped economies has suffered owing demand. It is expected that developingto sluggish economic outlook. The r ecovery economies in Asia, Latin America, Easternhas been m ainly spearhead ed by p ortfolio Europe and parts of Africa would continueflows with the share of Foreign Direct to grow at healthy rates resulting fromInvestment (FDI) witnessing a falling trend accommodative monetary policies, risingin recent times.

exports and consumption patterns andII.2.3 In the present scenario, sustained capital sustained capital inflows. However, it isflows from advanced economies towards expected that inflationary pressures willthe emerging markets may w ell continue in continue to rem ain a m ajor cause of concernthe imm ediate future. This is mainly du e to during the forthcoming year. Inflationarythe resilience exhibited by the emerging pressures would m ainly result from a spu rte c o n o m i e s i n t h e f a c e o f g l o b a l in food and energy p rices, especially in theuncertainties immediately following the developing and emerging economies.financial crisis. However, geopolitical Financial markets in advanced economiesun certainties and volatilities with respect to

can expect limited tightening of monetaryinflationary pressures and the prospect of

policies in the forthcoming year. On thepolicy rate hikes to counter such pressures

other hand , there may be a comp arativelymay result in d eceleration of capital inflows higher degree of mon etary tightening in thetoward s these economies.

developing economies in order to tameII.2.4 The year 2010-11 also witnessed resurgence grow ing inflationary pressu res.

in commod ity prices, ma inly on accoun t ofrobust growth in d emand for commoditiesduring the second half of the year 2010. III.1 The Indian econom y is firmly placed on theGrowth in demand for commodities was path of recovery. As per the Advancespurred by rapid grow th experienced in the Estimates for National Income for 2010-11emerging market economies. This led to a (at constan t 2004-05 pr ices) released by thespu rt in oil prices du ring the first half of the Central Statistical Organization (CSO), theyear 2011. The rise in food prices was

grow th in Gross Domestic Product (GDP) atmainly related to supply-side shocks

factor cost is estimated at 8.6 per centcaused by weather conditions. These indu ring 2010-11, with agriculture an d allied

turn, would ad versely affect access to foodactivities growing at 5.4 per cent, indu stry

amidst volatility in food p rices.at 8.1 per cent and the serv ices sector at 9.6

II.3 Recovery expected to Stren gthen per cent. Corresponding growth in GDP

during 2009-10 was 8.0 per cent, withII.3.1 Keeping in mind the imp roving conditionsagriculture and allied sector, industry andin global financial markets, buoyant grow th

experienced in emerging and developing services grow ing at 0.4, 8.0 and 10.1 per centeconomies and growing confidence in the respectively. The trend in growth of GDPadvanced economies , the economic during the period 1970-71 and 2010-11 hasprospects for 2011-12 look promising. As been captu red in Chart 1.

I II . Domes tic Economy: 2010-11


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12.0

10.0

8.0

6.0

4.0

2.0

0.0

-2.0

-4.0

-6.0

GDP growth GDP growth trend

Percent

a: Total GDP

1970-71

1971-72

1974-75

1976-77

1978-79

1980-81

1982-83

1984-85

1986-87

1988-89

1998-99

2000-01

2004-05

2006-07

2008-09

2010-11

1990-91

1992-93

1994-96

1996-97

2002-03

Source: Macro-Economic & M onetary Developments, RBI, 2010-11

Chart I: GDP G rowth and Trend of Domestic Economy 2010-11 Price Index (WPI) on a year-on-year basis,

was recorded at 8.2 per cent in January, 2011

as aga inst 8.5 per cent in Janu ary, 2010. The

average WPI inflation rate during the

twelve month period (February, 2010 to

Janu ary, 2011) was 9.4 per cent as comp ared

to 2.4 per cent during the corresponding

per iod d ur ing 2009-10.

III.5 If the WPI inflation of 8.2 per cent record ed

during January, 2010 is segregated into

food and non-food items, then food

inflation stood at 9.30 per cent in Janu ary,

2011 as compared to 19.80 per cent in

January, 2010. Correspondingly, non-foodIII.2 As per the Index of Industrial Production inflation stood at 7.81 per cent in Janu ary,

(IIP), the industrial sector grew at 8.6 per 2011 when compared to 4.65 per cent incent during 2010-11 (April December) Janu ary, 2010. The recent sp urt in inflation,wh en comp ared to the previous year. Out

par ticularly d uring the end of year 2010 isof the three broad industrial sectors, the m a i n l y a t t r i b u t a b l e t o s u p p l y - s i d eman ufacturing sector which grew at 9.1 per bottlenecks driven by soaring prices ofcent dur ing 2010-11 (Apr il December) has fruits, vegetables, milk, poultry, fish etc.been the key driver of industrial growth. The inflationary pressures persist mainlyAmong other industry groups, the capital due to sustained domestic demand andgoods sector recorded an increase in spurt in commodity prices in the globalgrowth during 2010-11 (April December) markets.at 16.7 per cent when compared to the

I I I . 6 T h e G o v e r n m e n t h a d a d o p t e d a ncorresponding growth of 11.2 per centaccommodative monetary policy sincea c h i e v e d d u r i n g 2 0 0 9 - 1 0 ( A p r i l September 2008 with the intention ofDecember). As far as the consumer

mitigating the adverse effects of the globaldurables and non-durables sectors arefinancial crisis on the Indian economy.concerned, the growth rates have declinedHowever, it was forced to make an exitto 21.7 per cent and 0.7 per cent dur ing 2010-from the same for countering accentuated11 as comp ared to 22.7 per cent and 1.4 peri n f l a t i o n a r y p r e s s u r e s t h a t w e r ecent respectively during 2009-10 (April threatening the economy. The ReserveDecember), thereby ind icating a year overBank of India had to perform the difficultyear d ecline.task of ensuring sufficient liquidity for

III.3 With respect to the infrastructure sector, the smooth functioning of the markets on theindex for six core industries (crude oil, one hand while continuing with its anti-p e t r o l e u m r e f i n e r y p r o d u c t s , c o a l , inflationary m onetary p olicy stance on theelectricity, cement and finished carbon other. The RBI had increased the Cashsteel, which have a combined weight of Reserve Ratio (CRR) by 100 basis points,26.68 per cent in the IIP) grew at 5.6 per cent Reverse Repo Ratio by 250 basis points an dduring 2010-11 (April January) as the Repo Rate by 200 basis points sincecompared to a growth rate of 5.5 per cent February, 2010. With the tightening ofachieved d uring the corresponding p eriod liquidity conditions, the RBI startedof 2009-10. injecting liquidity throu gh rep o u nd er the

LAF beginning en d May, 2010.III.4 A major cause of concern du ring the year

was a spu rt in inflationary p ressures mainly III.7 C r e d i t g r o w t h , t h o u g h s o m e w h a tresulting from supply-side bottlenecks. moderated, remained above the projectedInflation, as measured by the Wholesale levels. In response to higher interest rates


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resulting from frequent policy rate hikes by Interest Subvention on Hou sing Loans up to

RBI du ring the year, non -food cred it 10 lakh where cost of housing unit do not

grow th decelerated and dep osit growth exceed 20 lakh has been further extended

accelerated . Net cap ital flows at US$ 36.7 for the FY 2011-12. The amount of loan

billion during April-September, 2010 were eligible under the Scheme has also been

higher when compared with US$ 23.0 increased up to 15 lakh (from the earlier 10

billion dur ing Ap ril-September, 2009. lakh) for housing un it whose cost does notexceed 25 lakh (from the earlier 20 lakh).III.8 However, net FDI into India moderated to

US$ 5.3 billion during April-September The proposal is expected to improve affordability

2010 as against the US$ 12.3 billion received levels and generate increased demand for

during April-September 2009. However, housing loans particularly from LIG and MIG

portfolio investmen t witnessed an increase segments. The proposal will encourage the State

dur ing the first half of the year 2010-11 with and/or Private sector agencies to undertake

net in flows to the tu ne of US$ 23.8 billion as construction of houses/flats within the cost

against US$ 17.9 billion received dur ing the range of upto 25 lakh, which will cater to the

sam e period of the year 2009-10. The su rge needs of a vast segment of the population.

in portfolio flows could be attributed toIV.2 Enhancement of Housing Loan Limit

sound economic fundamentals and rising under Priori ty Sector Lending: Th einternational liquid ity.

existing housing loan limit under Priority

III.9 During 2010-11, India's foreign exchange Secto r Len d in g by ba n ks h as be en

reserves continued to exhibit an increasing enhan ced from 20 lakh to 25 lakh.

trend. The country's foreign exchangeThis proposal will encourage lending by Banks

reserves increased to US$ 299.2 billion atto the Housing Sector to meet their overall target

end January 2011 from the level of US$of 40per cent lending to priority sector. As a

279.1 billion at end March, 2010.result, banks lending in this segment will

III.10 As far as social sector development is witness significant increase in the coming years

c o n c e r n e d , t h e s h a r e o f C e n t r a l due to increased demand for housing loans in

Governm ent expend iture on social services this segment .

including rural development in totalIV.3 Provision un der Rural Hou sing Fun d

expenditure (Plan and non- Plan) hasEnhanced: The provision under Rural

increased from 13.75 per cent in 2005-06 toHousing Fun d has been increased to 3000

19.27 per cent in 2010-11 (BE). Similarly, thecrore from the existing 2000 crore.

expenditure on social services by theThis proposal will encourage the provision ofGovernment (Centre and States combined)

Housing Finance to target groups in rural areas,has also shown increase in recent yearsa step towards mitigating the housing shortagereflecting higher priority to social services.in rural areas.The expenditure on social services as a

proportion of total expenditure has IV.4 Proposa l to Crea te M or tgage R isk increased from 21.1 per cent in 2005-06 to Guarantee Fund under Raj iv Awas23.8 per cent in 2008-09 and furth er to 25.2 Yojana: The Budget 2011-12 has proposedper cent in 2010-11 (BE). to create a Mortgage Risk Guaran tee Fun d

under Rajiv Awas Yojana to enable

prov ision of credit to Economically WeakerThe Hon 'ble Finance Minister in his Un ion

Sections (EWS) and LIG hou sehold s.Bud get for the year 2011-12 had announced

This proposal will encourage lending by banksthe following m easures w ith respect to theand housing finance institutions to EWS andhou sing and housing finance sector.

LIG households as the proposed Guarantee FundIV.1 Schem e of Interest Sub vention of 1 per

will enhance the credit worthiness of EWS/LIGcent on Housing Loans Liberalised

segments by providing guarantee cover to theFurther: The existing Scheme of 1per cent

IV. Un ion Bu d get 2011-12

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housing loans taken by these people . The Box II

proposal will result in strengthening theCentral Registry of Securitization Asset

housing finance market for the lower segmentReconstruction and Security Interest of

households and would result significantly inIndia (CERSAI)

mitigating their housing problems withThe Centra l Registry of Securitiza tion Assetincreased credit flow and its availability. The

Reconstruction and Security Interest oflending institutions will cover their risk of India (CERSAI), a Government Companydefault and enjoy capital relief on the loanslicensed un der Section 25 of the Com pan iescovered by the Risk Guarantee Fund.Act, 1956 has been incorporated for the

Box I pu rpose of operating and m aintaining theCentral Registry und er the prov isions of theMortgage Risk Gu arantee Fun d Trust forSecuritization and Reconstruction ofLow Income Hou singFinancial Assets and Enforcement of

The Hon 'ble Union Finance Minister in h is Security Interest Act, 2002 (SARFAESI Act).Budget speech for the FY 2011-12 has

The objective of setting up the Centralproposed to create a Mortgage RiskRegistry is to prevent frauds in loan casesGuarantee Fund under Rajiv Awas Yojanainvolving multiple lending from different(RAY) to enable p rovision of hou sing loansbanks on the same immovable property.to Economically Weaker Sections (EWS)This Registry has become operational onand LIG hou seholds.March 31, 2011. All transactions involving

The major objective of this Trust will be to creation of equitable mortgage by depositprovide default guarantee for housing of title deeds, asset reconstruction andloans up to 5 lakh sanctioned and creation of security interest m ade on or afterdisbursed by the lending institutions March 31, 2011 needs to be registered withwithout any collateral security and/ or CERSAI. Inform ation furn ished to CERSAIthird party guarantees to the new or include particulars of the property, natureexist ing borrowers in th e EWS/ LIG of encumbrance, institution with whichcategories. p r o p e r t y i s m o r t g a g e d e t c . Ea ch

registration made is assigned with oneThe Government of India, Ministry of

un ique asset identification num ber.Housing & Urban Poverty AlleviationTotal nu mber of institutions registered w ith(MoHUPA) will set up the Trust und er theCERSAI as on 30th June 2011 is 151 and theM o r t g a g e R i s k G u a r a n t e e S c h e m e .number of users created is 31388. TotalNa tional Hou sing Bank is expected tonumber of registration of mortgage bymanage and adm inister the proposeddeposit of title deeds d one by Banks/ HFCsFund Trust including providing theand other financial institutions as on 30thinfrastructure sup port & the required staff.June 2011 is 100021.

IV.5 Setting up of Central Electronic Registry:IV.6 Enhan cemen t in the Export Du ty for Iron

The Government h ad facilitated setting upOre, Reduction in the Customs Duty on

of Central Electronic Registry under theRaw Materials of Cement Industry: The

SARFAESI Act, 2002. This Registry hasrate of export d uty for all types of iron ore

become operational since March 31, 2011. has been enhanced and unified at 20per

cent ad valorem. Similarly, the basicSuch a Registry will help in creation of acustoms duty on tw o critical raw materialscentralized data base of all immovable propertiesof Cement industry viz. petcoke andand will enable prevent ion of frauds in housinggypsum is also proposed to be redu ced toloan cases involving multiple lending from2.5 per cen t.banks/HFIs on the same immovable property.

This will constitu te as an important step in As iron ore is natural resource, enhancement in

the export duty will discourage its export anddeveloping the market infrastructure.help in conservation of it. Iron and Steel is one

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of the essential raw materials used in the IV.10 Issue of Tax Free Bond s by Housin g and

construction of Housing. The proposal will U r b a n D e v e l o p m e n t C o r p o r a t i o n

result in reduction in prices of iron and steel as ( H U D C O ) : H o u s i n g a n d U r b a n

also improvement in its supply in the domestic Development Corporation (HUDCO) has

market. Similarly, the proposed reduction in been allowed to issue tax free bonds of

customs duty on two critical raw materials of 5000 crore for the developm ent of hou sing

Cement industry viz. petcoke and gypsum will sector.encourage increased supply of Cement inThis will provide boost to infrastructure

domestic market at more competit ive rates.development in housing.

The overall impact of enhancement in export

duty on iron ore and reduction in custom duty

on petcoke and gypsum will be reduction in the

cost of construction of housing. V.1 An Overview of the Mark et Position

IV.7 Proposal to Provide Investmen t Linked V.1 .1 Dur ing the yea r 2010-11 , g rowthDeduction to Businesses Which Develop mom entum remained strong in all the threeAffordable Housing under A Notified major sec tors of the economy v iz .Scheme industrial, agriculture and service sector,

d e s p i t e t h e v o l a t i l i t i e s . H o w e v e r ,This proposal will encourage private players topersistence of high food inflation rem ainedventure into developing low cost housing anda c a u s e o f c o n c e r n . I n a d d i t i o n ,thus help in increasing supply of low costinternational crud e oil prices also recoveredhousing unit s.sharply on the back of strong global

IV.8 Enhancement of the Exemption Limit for recovery further fuelling the inflation.the General Category of Individual

V.1.2 The Reserve Bank of Ind ia (RBI) shifted itsTaxpayers: The exemption limit for the

monetary policy stance from managinggeneral category of individual taxpayers

recovery to managing inflation during thehas been increased from 1,60,000 to

course of the year as inflation emerged as a1,80,000 from FY 2011-12. This measure

major concern for the Ind ian econom y. RBI,will resu lt in a un iform tax relief of 2,000 to in its effort to contain inflation, hiked repoevery taxpayer.

rate 8 times during the year from 5.25per

cent to 7.50per cent. Similarly, reverse-repoThis proposal will increase the loan repayinghas also been increased from 3.75per cent tocapacity of the individual home loan borrowers6.50per cent during the same period.which may result in the increase in demand forFurther regulated savings bank deposithousing loan.interest rate was also increased from

IV.9 Continuation of Income Tax Benefits3.50per cent to 4per cent.

un der Sections 24, 88 And 36(1)(viii) of th eV.1.3 Liquid ity in the system has remained tightIncome Tax Act: The Budget 2011-12 has

throughout the year with banks regularlyretained the benefits of tax exemptions

borrowing under LAF window from RBI.un der aforesaid Sections of the I. T. Act, viz.All these developments have made creditrepayment of principal amou nt of loan up tosignif icantly costly as compared to1 lakh, interest up to 1.50 lakh andprevious year. Further transition to Base

creation of Special Reserve under SectionRate regime by th e banks on th e instruction

36(1)(viii).of RBI has also impacted the cost of short

Retent ion of the aforesaid incentives will term credit as banks are not permitted tocontinue to generate new demand for housing lend below base rate.

loans as also supply of credit, with downwardV.1.4 Going forward , inflation path rem ains

bias in rates.sticky and r isks are on the up side. Headline

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Financial Performance of the Bank du ring 2010-11

V. Resou rce M ob ilization


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inflation could r emain elevated in the first

ha lf of 2011-12 before declining g rad ua lly in

the second half, but could r emain above the

Reserve Bank 's comfort level. Pass-through

of global commodity prices, especially oil,

has been as yet incomp lete and constitutes a

significant m edium-term risk.V.2 Resources mob ilised du ring the year

V.2.1 NHB raised both short term and long term

resources during the year. Short term

resources includ ed issuan ce of Comm ercial

Papers (CPs) and Short Term Loans from

banks. Long Term borrowings includedpayment of financial obligation on the

issuance of Zero-coupon Bonds (ZCB),instruments.

Coupon Bonds, Term Loans from banks,

Deposits from banks und er Rural Housing The total borrow ing outstan ding as on 30th

Fund (RHF), Deposits from Housing Jun e 2011 is 21,776 crore.

Finance Companies (HFCs) and DepositsV.3 Sources of Fun din g

from public under SUNIDHI andV.3.1 Rural Housing Fund (RHF) : WhileSUVRIDDH I term dep osit schem es. The

presenting the Union Budget for the yeargross incremental borrowing during the2008-09, the Hon'ble Finance Minister,year was 35,503 crore. After repaym entsannounced creation of a fund to enhance

during the year, the net incrementalNHB's refinance operations in the rural

borrowing during 2010-11 was 10,182housing sector by tapping the resources of

crore. Schedu led Commercial Banks to the extentof shortfall in their p riority sector lend ing.The allocation for the year 2008-09 was2000 crore. In the yea r 2009-10 and 2010-11

a further sum of 2000 crore each wasallocated by the banks to the Fun d.

V.3.2 Bonds and Deben tu res : Bonds andDebentures have been one of the maincomponents of resource raising during theyear 2010-11. Bonds and Debentures for aface value of 4025 crore were issuedduring the year including a Zero CouponBond for face value of 800 crore. Theactual cash inflow on account of suchissuan ce w as 3867 crore. While theCoupon / discount on these Bonds and

Debentures ranged between 7.00per centand 9.75per cent, the tenors ranged between

V.2.2 Bond s issued by NH B are rated AAA by 12 months an d 60 months.at least two of the rating agencies app roved V.3.3 SUNIDHI & SUVRIDDHI termby SEBI viz. CARE ratings, CRISIL, Fitch deposit schemes: NH B launched two newratings and Brickwork ratings and are listed term deposit schemes viz. SUNIDHI &

SUVRIDDHI during the year 2008-09.on Bombay Stock Exchange / Na tionalSUNIDHI term deposit is open forStock Exchange. Commercial Papers issuedi n d iv id u a l s / H U F s/ P a r tn e r sh i p s / by NH B du ring the year were rated A1+Societies & Trusts / Association of Persons.

by ICRA. These ratings indicate highestMinimum tenor is one year and the

degree of certainty regarding timely maximum is five years. SUVRIDDHI is

`

`

`

`

`

`

`

`

4000

3500

3000

2500

2000

1500

1000

500

0BONDS &

DEBENTURESLOAN AGAINST

DEPOSIT (LAD)

RURAL HOUSING

FUND

SUNIDHI /

SUVRIDDHI

TERM LOANS

3867

280

2015

48

3972

Chart II: Net In cremen tal Borrowing

of N HB dur ing 2010-11

Net incremen tal Borrowing du ring 2010-11 ( Rs. Crore)

Chart III: Borrowing Ou tstandin g of

NH B as on Ju ne 30, 2011

RURAL HOUSING

FUND26%

BONDS &

DEBENTURES

45%

TERM LOAN S

23%

EXTERNAL

BORROWING 2%CBLO 2%

LOAN AGAINST

DEPOSIT1 %

DEPOSITS-

PUBLIC / HFCs1%


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ter m d ep osit sche m e op en on ly for for the housing projects.individuals and HUFs and the tenor is five VI.1 Ref inance Performanceyears. SUVRIDDHI is notified under

VI.1.1 Du r ing the year 2010-11 , refinan ceSection 80C of Income Tax Act, 1961.disbursements touched the highest everAmoun t ou tstand ing as on 30.06.2011 un derfigure of 11,722.79 crore, reg ister ing anboth the schemes is 223 crore out of whichincrease of more than 44per cent over the48 crore was mobilised d uring th e year.

d isbur sements of 8,107.76 crore mad e inthe year 2009-10 . Out of the to ta l

NH B extends Financial assistance through d isbu rs em en ts, 5,785.58 cror e w ererefinance as also the pr oject finance disbursed for rural housing und er NH B'sw in d ow s. Th e re fin an ce as sis ta n ce two rural housing refinance schemes viz.pr ovided to variou s Prima ry Lending the Golden Jubilee Rural Hou sing RefinanceInstitutions viz. Banks, Hou sing Finance Scheme (GJRHRS) and the Rural HousingComp anies, Co-operative sector institutions Fund (RHF), together constituting 49.35peris towards their individu al hou sing loans. cent of the total disbu rsemen ts.The project finance intervention of the Bank VI.1.2 The break-up of the disbursem ents mad e tois through the direct finance window to different categories of institutions underPub l i c and Deve lopmen t agenc ies / different schemes during 2010-11 is as

M u n i c ip a l C o r p o r a t io n s / W e l f a r e under:Association / Micro Finance Institutions etc

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VI. Dep loym en t of Fu nd s

InstitutionCategory Scheme

Regular RHF GJRHRS Total

HFCs 1139.21 1687.54 481.92 3308.67Scheduled Banks incl. RRBs 4798.00 316.12 3300.00 8414.12

Total 5937.21 2003.66 3781.92 11722.79

Table I: Refinance Disbursements( ` Crore)

The graphical representation of disbu rsements

du rin g 2010-11 is as un der:

15000

10000

5000

0

Regular RHF GJRHRS Total

H FCs Sch ed uled Ban ks in cl. RRBs Total

Trend of refin ance disb ursed since 1999-2011 is as und er:

Chart V : Trend of Refin ance Disb ursem ents 1999-2011

Trend of Refinance Disbu rsements

Disbursements

15000

10000

5000

0

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2005

-06

2006

-07

2007

-08

2007

-08

2009

-10

2010

-11

2004

-05

Chart IV: Refinance Disbu rsements

( ` Crore)

Year

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Disb.

842

1008

1025

2710

3253

8062

5632

5500

8587

10854

8108

11723


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VI.1.3 Performance und er Rural Housing to be included, about 84per cent of therefinance disbursements in 2010-11 wereOu t of the total refinance disbursem ents ofmad e in respect of hou sing loans up to 1511,722.79 crore, 49.35per cent aggregatinglakh.5,785.58 crore were disbursed under the

Rural H ousing Fund (RHF) and th e Golden VI.2 Project Finan ce PerformanceJubilee Rural Housing Refinance Scheme

VI.2.1 Dur ing the year 2010-11, the Bank has(GJRHRS) togeth er in respect of loans given

sanctioned Project Finance assistance for 6by Primary Lending Institutions (PLIs) inthe rural areas. projects am ounting to 78.80 crore and

d i s b u r s e d 3 12 .0 0 c r o r e i n c lu d i n gThe break-up of the disbursements madeunutilized sanctions of previous years. Thisfor rural hou sing is as under:disbursement was one of the highest in

Table II. Refinance Disbursements to Rural Housing Pro ject Finan ce of the Ban k. Thedisbursements were made to HousingMicro Finance Inst itut ions, Public Agenciesand Joint Ventures under Public PrivatePartnership.

Category w ise break up of disbursement isas under:

VI.1.4 Focus on Low & mod erate Size Loans

The disbursement of refinance during theyear 2010-11 focused on Low and mod eratesize loans The distribution of refinancedisbursements on the basis of individualloan size is as und er :

VI.2.2 Cum ulatively, till end of the Jun e 2011, the

Bank has sanctioned 434 projects having

project cost of 5997.45 crore and loan

comp onen t of 4528.36 crore. So far the

Bank has disbu rsed 2042.67 crore un der

Project Finance.

Thus, more th an 35per cent of the refinancedisbursements in 2010-11 were made inrespect of housing loans up to 5 lakh.Moreover, if loans upto 15 lakh were also

``

`

`

`

`

`

`

`

`

Hou sing Finance Comp anies

Scheduled Banks incl. RRBs

Size of IndividualLoans against whichRefinance Disbursed

Amount

( crore)`Percentof Total

Upto 2 lakh 290.35 2.48

` 2 lakh to ` 5 lakh 3816.53 32.56

` 5 lakh to ` 15 lakh 5740.29 48.96

Over ` 15 lakh 1875.62 16.00

Total 11722.79 100.00

`

Table III: Refinance Disbursement s

for Low & M oderat e Size Loan

Disbursements Budget Achieved

Public Housing Agencies 500 216

Slum Redevelopm ent

Projects / EWS / LIG / 75 6

Hou sing Micro Finance

PPP and others 100 90

Total 675 312

Table IV: Project Finance

Disbursements

( ` Crore)

Hous ing com plex un der const ruct ion -Publi c Priv at e Part nersh ip

A project of Andh ra Pradesh R ajiv Sw agruh a

Corporation Lim ited financed by NHB

Institu tion Category Amount

( Crore)`

H ou sin g Finan ce Com pan ies 2169.46

Sch ed u led Ban ks in cl. RRBs. 3616.12

Total 5785.58


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VI.2.3 UN-HABITAT Water & Sani ta t ion Rajasthan throu gh joint p articipat ion of the

P r o g r a m m e : N H B h ad si gn ed an public and the private sectors. The event

a g r e e m e n t o f c o o p e r a t i o n w i t h m a r ke d t h e co m i n g t og et h er o f t h e

UN-Habitat for collaborating on water

supply and sanitation projects for low

income households in the year 2008-09.

Und er the agreemen t, UN Habitat has Stakeholders, viz. NHB, IFC and GoR to

agreed to prov ide $3,75,000 throu gh NHB sign the MoU in New Delhi on October

for the w ater and sanitation comp onent of 27, 2010.

housing micro finance projects, for VI.2.6 Consistent with the charter of the NH B andstandalone water and sanitation projects in line with the IFC's growing interest in th eand for capacity building and training

Indian m arket, the Partnership w ill lead toefforts in this field.

the creation of a State-specific specialisedVI.2.4 During the year 2010-11, an amount of Housing Finance Institution to cater to the

$1,27,500 has been received by the Bank in underserved market. The Partnership isthe second instalment and in turn N HB has also expected to spu r the d emand for low

disbu rsed 25.00 lakh to Nanayasu rabhi and moderate housing through creditDevelopment Financial Services for supp ort from the lending institutions. Theconstru ction of estima ted 312 toilets for the growing demand will spur hou sing supp lymem bers of SHGs op erating in 3 districts of

through a conducive and sup portive StateT a m i l N a d u a n d 1 .5 0 c r o r e f o r

hou sing Policy. This has the potent ial ofconstruction of estimated 5000 toilets for

turning into a unique m odel to address theindividual members of the registered

housing shortage among the low incomePrimary Milk Producers' Co-operative

households.Societies affiliated to Kaira District Co-

VII Housing M icro Finance (HM F)operative Milk Producers' Union Limited

(KDCMPUL), Gujarat. Additional funds VII.1 NH B has been at the forefront of Hou singfor the above d isbursements w ere provided

Microfinance (HMF) initiatives by givingby NHB from its Special Fund . One nationalfinancial assistance to MFIs in various par ts

level workshop on w ater and sanitation hasof the country. The Bank has recognised

been organized in Nagpur, under theCommunity Based Financial Institutions

Programme.(CBFIs) as delivery mechanisms for

VI.2.5 MO U with IFC and State Governm ent of channelizing housing finance to the un-Rajasthan: NHB, International Finance served and the und erserved at the local andCorporation (IFC) and Government of decentralized level. According ly, NH B hasRajasthan (GoR) have entered into a developed a Housing Microf inancepartnership and signed a Memorandum of

Programme to cater to the needs of thisUnd erstanding (MoU) to promote low and

section of society.moderate income housing in the State of

`

`

Nat ional w ork shop on w at er

and sanitation at Nagpur Signing of Memorandum of Understanding between

National Housing Bank, International Finance

Corporation and Govt. of Rajasthan in the presence of

Minister of State for Finance, Sh Namo Narain M eena


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VII.2 Und er the Hou sing Micro Finance, the Stud y has covered both qualitative and

Bank's focus is to develop sustainable qu an tita tiv e as p ects of th e len d in g

hum an habitats wh ich are eco-friendly, cost Program me. Apar t from stud ying the

effective and produ ctive. Work sheds form impact of the HMF Program , the stud y will

an integral par t of all hou sing projects with also help in deriving essential policy inpu ts

necessary water and sanitation facilities. that could contribute to the scheme's

Incremental hou sing (repair/ renovation) overall effectiveness and identification ofassum es significance in the context of factors which can expand the scope and

afford ability and sustainability of the potential of HMF assistance provided by

programme. Housing microfinance (HMF) NH B.

programme of Bank, during the last few The Study focussed on analysing they e a r s o f o p e r a t i o n , h a s d i s p l a y e d fu l f i lmen t o f HMFs ob jec t ive , i t sencouraging results. geographic expansion and coverage,

VII.3 The Bank's Housing Micro Finance (HMF) assessment of the role played by NH B and

programme started in 2004, and the Bank client MFI's, assessment of borrow er's

has sanctioned loans to 29 microfinance profile relating to various economic and

institutions in 11 States in the country. dem ograp hic ind icators such as age,

Du ring the year 2010-11, fund s were gend er, income, etc. The pu rpose of thed isbu rsed to 6 new MFIs and extended to 3 S t u d y w a s t o s u g g e s t v a r io u s

new States viz. Gujarat, Uttar Pradesh and fact or s/ p ar am et er s for en h an cin g

West Bengal. The program has resulted into / widening the scope and operations of

construction/ repair and renovation of NH Bs HMF Programme.

24,255 housing units located in both urban Box IIIand rural areas of the country. The

Key Findings of the Study on NHB'sbeneficiaries includ e farmers, petty trad ers,Housing Micro Finance Programmeartisans, dairy workers and other low(2007-2010)income households. More than 90per cent

of the beneficiaries were w omen . ? HMF is in a nascent stage in the Indian

micro-finance sector. There are very fewexamples to demonstrate its scalability

and imp act on the target sections.

? The sanctions data is showing constant

add ition of new clients and disbursements

over the period showing diversification

from the southern states of Tamil Nadu

and And hra Pradesh.

? Average amount of loan is showing

decreasing trend over the p eriod of stud y

primarily due to the fact that majority of

loans are taken for the purpose of repairsa n d r e n o v a t i o n a n d n o t f o r n e w

construction.

? Majority of borrowers belong to the 30-40

years age bracket and are employed in

VII.4 Stud y on H ousin g Micro Finan ce (HM F) - a g r i c u l t u r e s e c t o r o r d e p e n d o n

Assistance provided by NHB: The Bank agriculture for livelihood .

had conducted a study on the Impact? Majority of borrowers have monthly

Analysis on the HMF assistance provided hou sehold income ranging from 5000 toby NHB to evaluate and assess the impact 10,000.of NH B's assistance provided to MFIs. The

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? Majority of the beneficiaries are charged the ena ble Prim ary Lend ing Institu tion s

rate of interest between 12per cent to 15per (PLIs) to access funds for extendingcent. housing finance to targeted groups in rural

? Women borrowers are major beneficiaries areas at competitive rates. The corpus of

forming 80per cent of total borrowers the fund since the year 2008-09 hasund er the programme. remained at 2000 crore for each year. A

total amou nt of 5778.18 crore has been? Micro Finance Institu tions (MFIs) providereceived by the Bank u nd er the Fun d, andan innovative channel to finance housing

for the poor. How ever, the ability for the Bank has dep loyed the full amoun t

microfinance institutions to provide towards refinance for rura l housing for thehousing continues to be d ifficult, mired in target groups. Most of the lending un derconcerns over scarce funding, legal risks the Rural Housing Fund has been forarising from informal land title, lack of hou sing loans of less than 5 lakh, whichcollateral and insufficient knowledge

shows that the Fund has been utilized forabout construction

its intended pu rposes.

? To conclud e, Hou sing Microfinance (HMF)

IX.1.2 With the advent of the Rural Housing Fundprogramme of Bank during the last fourat competitive rates, many institutions viz.

yea r s o f ope ra t ion , has d i sp layedHousing Finance Companies, Regionalencouraging results. However steps needRural Banks (RRBs) etc. have enter ed in toto be taken to expand its outreach andthe rural housing landscape, therebyensure its holistic development. For ar e s u l t i n g i n b e t t e r g e o g r a p h i c a lholistic developm ent of prog ramme, there

distribution and increased penetration ofis a need for concerted efforts on th e par t of

all the stakeholders towards capacity- housing loans among the un derprivileged

building measures and establishing segments of the society. Further, thelinkages with institutions that have a success of RHF has also introd uced a fairstrong p resence in the ru ral sector.

a m o u n t o f u n d e r s t a n d i n g o f t h echaracteristics and contours of the rural

housing finance market, enabling theDuring the year 2010-11, Profit before tax

various players to design better and morewas 399.20 crore as again st 422.10 croretargeted prod ucts for the ru ral popu lace.during the previous year, registering a

decline of 5.43 per cent. Similarly, the IX.1.3 The Housing Finan ce Companies have, inProfit after tax, which stood at 278.93 all, d isbur sed 1687.54 crore un der thecrore as again st 280.24 crore dur ing the Rural Housing Fund, wh ich has h elped inpreviou s year, show n a decline of 0.47 per

creation of dwelling units for women,cent. As a result of p lough back of Profit to

marginal farmers, small artisans, mem bers

Reserves, the Net Owned Fund of the Bank of scheduled castes and scheduled tribesincreased from 2,485.32 crore to 2,770.23and minority commu nities. Similarly, thecrore du ring the year.RRBs have now taken up h ousing finance

as a m ajor focus ar ea. The Bank h as, du ring

2010-11, added 6 new Regional Rural

Banks as its refinance clients. ThroughIX.1 Rural Hou sing Fun d

RRBs, an amount of 134.12 crore wasIX.1.1 The Hon 'ble Finance Minister, in his Union disbursed und er the Rural Hou sing Fund.

Bud get speech for 2008-09, annou nced the Efforts are being m ade to encourage moresetting up of the Rural Housing Fund to RRBs across the country to take up rural

VIII. Financial Performance: 2010-11

Gen eral Activities

IX Ru ral Hou sin g Fin an ce

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housing finance in a major way and to Sche m e aim s to p ro vid e th e ru ra l

avail refinance from NHB for this purpose, ho u seh old s a form al p lat form for

which will go a long way in prom oting sophisticated access to hou sing finance to

housing finance in rural areas throughou t enable an individual to either build a

the country. modest house or improve/ add to his

existing dw elling un it.

IX.1.4 To prom ote housing finance in the deep andrem ote ru ral areas , a few Public Sector IX.2.2 The success of the Schem e can be attr ibuted

Banks, which had met the priority sector to the fact that over 31 lakh dw elling un its

targets for the year 2009-10 and had have been financed un der the Scheme since

therefore not contributed to the allocation its inception throu gh various PLIs viz.

und er Rural Hou sing Fund for 2010-11, H ou sing Finan ce Com pa nies (HFCs),

availed refinance assistance in respect of P u b li c Se ct o r Ba n k s (P SBs ) a n d

their lending to weaker sections for Coop era tive Sector Instit u tion s. The

hou sing in ru ral areas having pop ulation allocation of targets to various PLIs un der

of up to 5,000 as per the 1991 Census. An the Scheme as well as its mon itoring is don e

amoun t of 182 crore has been prov ided to by the National Hou sing Bank.Public Sector Banks under this Scheme in

IX.2.3 Performance during 2010-11: During the2010-11. year 2010-11, a total of 2,93,721 units were

IX.2 Golden Jubilee Rural Housing Finance financed by HFCs and PSBs under the

Scheme Schem e as against a target of 3,75,000 un its

t h u s a c c o u n t i n g f o r 7 8 p e r c e n tIX.2.1 The Golden Jubilee Rural Housing Financea c h i e v e m e n t . T h e c o n s o l i d a t e dScheme (GJRHFS) was launched on theperformance of HFCs and PSBs under theoccasion of the Golden Jubilee of theScheme during the last two years can benation's Independence in 1997. Theoutlined as below:

`

Table V: Golden Jubilee Rural Housing Finance Scheme:

Perform ance during 2009-10 & 2010-11

Institution Target Achievement Percentage Achievement

2009-10 2010-11 2009-10 2010-11 2009-10 2010-11

HFCs 87,500 93,750 78,207 1,20,111 89 128

PSBs 2,62,500 2,81,250 3,09,585 1,73,610 118 62

Total 3,50,000 3,75,000 3,87,792 2,93,721 111 78

(Num ber of dwelling units)

Table V: Golden Jub ilee Rural Hou sing

Finan ce Scheme: Perform ance du rin g 2009-10 & 2010-11


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IX.2.4 Cumula t ive Pe r fo rmance under the financed by the H FCs and PSBs as against a

Scheme: In terms of achievement, the ta rg et of 33,55,000 d w ellin g u ni ts

perform an ce of the Schem e since its (approximately 94 per cent of the target)

inception has been laud able, as can be du ring the period from 1997 to 2011. The

conclud ed by the fact that a total of progress of the Scheme since the inception

31,52,967 d w elling u nit s ha ve been is as follows:

Table VI: Golden Jubilee Rural Housing Finance Scheme: Cumulat iv e Performance

Year Target Achievement Amount d isbursed

( ` in crore)

1997-1998 50,000 51,272 ---

1998-1999 1,00,000 1,25,731 ---

1999-2000 1,25,000 1,41,363 ---

2000-2001 1,50,000 1,58,426 ---

2001-2002 1,75,000 1,87,268 3246.03

2002-2003 2,25,000 1,78,200 3816.34

2003-2004 2,50,000 2,43,753 6353.82

2004-2005 2,50,000 2,58,562 6440.95

2005-2006 2,75,000 2,98,651 8367.86

2006-2007 3,30,000 2,98,426 7664.58

2007-2008 3,50,000 2,71, 537 8844.81

2008-2009 3,50,000 2,58,265 10337.88

2009-2010 3,50,000 3,87,792 15,565.24

2010-2011 3,75,000 2,93,721 14,814.91

Total 33,55,000 31,52,967

IX.2.5 The performances of HFCs and PSBs und er

the Scheme have continuously been X.1 As part of its developmental role, NHB hasimproving over the last few years. equity participation in two Housing

However, the p erformance of PSBs du ring Finance Companies viz Cent Bank Homethe current year w as slightly unimp ressive Finance Limited (Spon sored by th e Centraland keeping in view that the PSBs have Bank of India) and Mahindra Ruralbeen able to achieve only 62 per cent of Housing Finance Limited (a companytheir target during the current year as formed for extending housing financecompared to 118 per cent during the last exclusively in ru ral and semi-urban a reas).year, the target for the year 2011-12 has The realizable value of equity holding inbeen kep t fixed a t 3,75,000 dwelling un its. these two HFCs as on 30-06-2011 stood atFor further improved performance of the 11.97 crore.HFCs and PSBs, the Scheme is being

X.2 During the year 2010-11, the Bank has alsoclosely monitored by N HB.agreed to subscribe to the equity of a new

X Equity Participation

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Hou sing Finance Comp any being formed Comp any subject to wh ich certificate is

in the State of Rajasthan to cater to the granted and observance by the Comp any

housing finance needs of the low and of the provisions of the Act and the

midd le income segments in the State. The directions/ guidelines issued there-und er.

proposed n ew compan y is to be formed in XI.1.3 During the year, the Certificate ofcollaboration with the Government of Registration was granted to 5 new HFCs

Rajasthan, the International Finance viz. Home First Finance Company IndiaC o r p o r a t i o n a n d P r i v a t e S e c t o r Pvt. Ltd., Aadhar Housing Finance Pvt.Institutions. Ltd., Equitas Housing Finance Pvt. Ltd.,

X.3 The Bank has also, d urin g 2010-11, Muthoot Housing Finance Company Ltd.

subscribed to the equity share capital of & Shu bh am Hou sin g Dev elop m en t

Centr al Registry of Secur itisation Asset Finance Company Ltd. As on Jun e 30, 2011

Reconstruction and Security Interest of the total nu mber of HFCs registered with

Ind ia (CERSAI). The Com pan y is a NH B stood at 52 of wh ich 33 compan ies

G o v e r n m e n t C o m p a n y w i t h a h a ve b ee n g ra n te d C er t i f ica te o f

sharehold ing of 51per cent by the Central Registration without perm ission to accept

Govern men t. Select Public Sector Banks pu blic deposits.

and the National Housing Bank are the XI.1.4 During the year Bank has cancelled theother shareholders of the Compan y. Certificate of Registration of 5 companies.

Aindri Housing Finance & Pvt. Limited,

SRS Housing Finance Limited & UtkalXI.1 R e g u l a t i o n o f H o u s i n g F i n a n c eHousing Finance Limited surrenderedComp anies (HFCs)their Certificates of Registration, as they

XI.1.1 The HFCs, which are dedicated institu tions were not undertaking housing financefor housing finance in the coun try, are business. Further, IDBI Home Financeregulated an d su pervised by the N ational Limited surrendered the CoR as theHou sing Bank u nder the provisions of the comp any is merged w ith the parent Bank.National Hou sing Bank Act, 1987 and the The Certificate of Registration of Jahnavi

directions and guidelines issued there- Home Development and Finance Limitedund er from time to time. The measures of was cancelled due to its non compliancer e g u l a t i o n i n c l u d e s t i p u l a t i o n o f with the Directions/ Guidelines issued byp ruden t i a l no rms , t r anspa ren t and the Bank.standardized accounting and disclosure

XI.1.5 N o t i f i ca t i o n o f H F C u n d e r t h epolicies, fair practice code, asset liabilitySARFAESI Act: During the year 2010-11,management and other risk managementIndia Infoline Housing Finance Limitedpractices etc. These measures h ave helpedhas been n otified u nd er the SARFAESI Actto ensure the developm ent of the sector onby Ministry of Finance, Government ofhealthy and sustainable lines.India.

XI.2 Registration/Cancellation of CoRs for HFCsXI.2 Su pervision of HFCs

Companies desirous of commencing the XI.2.1 NHB supervises the working of HFCsbusiness of housing finance are required tothrough a system of on-site inspections,obtain a certificate of registration from them a r k e t i n t e l l i g e n c e a n d o f f - s i t eNational Housing Bank. The certificate issurveillance for which periodic returnsgranted after the Bank is satisfied that thehave been prescribed.a p p l i c a n t c o m p a n i e s f u l f i l l e d t h e

cond itions for gran t of such certificate XI.2.2 During the year, the Bank insp ected 44

prescribed un der the Na tional Housing HFCs, out of which 36 were regulatory

Bank Act, 1987. The continu ance of the insp ections to ensu re comp liance of the

reg is trat ion depends on the continued p r o v is io n s o f t h e A ct a n d t h e

compliance of the conditions by the Directions/ Guidelines thereunder and 8

XI. Regu lation an d Su p ervision


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were in connection with the grant of 11, 2010. The new Guid elines includ e all

Cer tifica te of Regi st ra tio n to n ew aspects of loan sanctioning, disbursal and

comp an ies. Close m onitor ing of the repayment issues, in order to bring more

subm ission of qua rterly, half-yearly and clarity and transp arency. The new Fair

an nu al retu rn s by H FCs w as u nd ertaken . Practices Cod e is in align men t w ith th e RBI

Code for N BFCs in th e related ar eas.XI.2.3 The Bank v ide its Circular dated May 01,

2007, specified minim um Net Ow ned Fund XI.4.3 Further, Bank has also issued revised(NOF) of 2 crore for a housing finance Guidelines on Asset-Liability Managem ent

compan y wh ich carries on the business of System for HFCs vide Policy Circular

hou sing finance by March 31, 2008. As on No.35/ 2010 dated October 11, 2010. The

date Ind Bank Hou sing Ltd. is the only revised ALM guid elines are app licable to all

compan y having NO F less than 2 crore. HFCs irrespective of whether they are

Ind Bank Hou sing Ltd. confirmed that it accepting / holding pu blic dep osits or not.

was not undertaking any new housing XI.4.4 Keeping in view the direction receivedfinance business. from Government of India, Ministry of

XI.3 Impor tant Noti fica tions Finance and taking into account the

discussions held w ith CEOs of HFCs, NH BXI.3.1 Increasing the requirement of m inimumhas issued directive to all HFCs not toNOF The Bank vide its Notification No.charge any prepayment charges/ pre-N HB.HFC.REG-4/ CMD/ 2011 increasedpayment penalty in case the outstandingthe requirement of minimu m NOF of HFCloan am ount is paid by the borrowers out offrom 2 crore to 10 crore to be eligible tohis/ her own sources (Circular No- NHBcommence or carrying on the business of(ND)/DRS/Pol-No-36/2011 dated OctoberHFI on or after June 18, 2011.18, 2010).

XI.3.2 The Bank has also specified the m inimu mXI.4.5 Keeping in view the latest provisions of RBINOF requirement for all the existing

app licable to Commercial Banks, NHB hasregistered H FCs desirous of carrying on thealso i ssued the Circu la r No- NHBbusiness of housing finance institutions( N D ) / D R S / P o l - N o - 3 7 / 2 0 1 1 d a t e d

beyond March 31, 2014 in the following December 24, 2010 on LTV Ratio, Riskphased manner-Weights and Provisioning requirements

(i) 4 crore by Ju ne 30, 2012, etc.

(ii) 7 crore by Ju ne 30, 2013 an d XI.4.6 Bank has ad vised all HFCs vide its Circular

(iii) 10 crore by March 31, 2014 No-NHB(ND)/DRS/Misc./Cir No.2/8792

/2010 d ated December 28, 2010 to becomeXI.4 Revised KYC Gu idelin es, Anti Mon eymember of at least one credit informationLaund ering M easures, Fair

Documents

National Housing Bank Annual Report 2010-2011