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Celebrating Silver Jubilee Year
By A Special Correspondent

National Housing Bank (NHB) is the apex institution for housing finance in the country. The Bank was set up through the National Housing Bank Act, 1987, and started its functioning on 9th July, 1988. The Bank entered in its Silver Jubilee Year on 9th July 2012. To commemorate this important milestone in the journey of the institution, NHB organized the Inaugural Event for the year long Silver Jubilee Celebrations on July 9, 2012 at New Delhi. The Event was graced by Kumari Selja, Minister for Housing & Urban Poverty Alleviation and Minister of Culture, Chairman, Economic Advisory Council to the Prime Minister, Dr C Rangarajan and the Minister of State for Finance, Mr Namo Narain Meena and other dignitaries.

Shri RV Verma, addressing the gathering at NHB’s Silver Jubliee Year Inaugural Function  in the esteemed presence of Kumari Selja, Minister for Housing & Urban Poverty Alleviation and Minister of Culture, Chairman, Economic Advisory Council to the Prime Minister, Dr C Rangarajan and the Minister of State for Finance, Shri Namo Narain Meena and other dignitaries.

The Bank, which is a wholly owned subsidiary of the Reserve Bank of India, is a multi-functional Development Finance Institution for the housing sector. Its roles have included financing, promotional and regulation and supervision. The number of housing finance companies has grown over the years and is currently 55 in number, serving different regions of the country. While the number of retail housing finance companies has grown, the sector has withstood the volatilities of the market. NHB, through the years, has sought to perform its multiple roles in a mutually synergic manner, consistent with its Charter and has endeavoured to develop a sound, sustainable and stable housing finance system in the country.

When NHB started functioning in 1988, the housing finance market in the country was in a very nascent stage. In the 2½ decades since then, NHB has played a seminal role in the development of the market that has grown to the present size and state. Over the years, the Bank has adopted a responsive and market oriented approach in determining its regulatory and promotional policies for the housing finance companies and the housing sector. The NHB's initiatives on developing the market infrastructure are aimed at improving the robustness and stability consistent with the growing market. Transparency and efficiency are keys to the development of a sustainable demand-driven housing finance system.  NHB is helping promote these aspects of the market through a number of regulatory and promotional measures, including moral suasion and awareness building in the industry.

The housing finance industry today comprises of the entire banking sector, housing finance companies, and cooperative sector institutions. The Bank was set up at a time when housing finance as a product was in its infancy, and the economy itself was on the threshold of change. From its early years, amid rapidly changing market dynamics, attendant on liberalization and deregulation, NHB had to steer a nascent sector through the transition from a controlled economy to a competitive and market oriented system. That retail housing finance is, today, available from a diverse set of institutions at competitive terms and also that the lending community have found a good and sustainable business model in retail housing finance; can to some extent be attributed to the efforts of NHB. Facilitating and catalyzing the credit flow in the housing sector, NHB's enabling policies have supported the expansion in home ownership in the country.

Collaborating with a number of stakeholders in the Government and private sectors, NHB has been advocating and pursuing a partnership approach for better all-round growth and penetration of the market. The Bank has adopted a number of measures that have resulted in building confidence among various constituencies viz. the savers, depositors, borrowers, lenders, institutional investors, construction agencies, rating agencies, etc. This is among the central roles of the NHB that can guide the market to achieve its potential in terms of scale and depth on a sustainable basis. As an apex institution with its multi-functional role, NHB has sought to widen the housing finance market with due regard to reliability and credibility of the system.

Information and data flow have important implications for the housing and real estate market, and NHB is in forefront of information collection and dissemination for use by all stakeholders. The annual ‘Report on Trends and Progress of Housing in India’, the housing finance information portal www.housingindia.info, the quarterly residential price index (RESIDEX), and other publications, provide valuable information and insights into the sector for the users.

The efforts made by NHB towards the creation of a secondary mortgage market in the country were reflected in the Bank's development of Residential Mortgage Backed Securitization (RMBS) products, under the provisions of the NHB Act, In the aftermath of the sub-prime crisis and appropriate lessons learnt therefrom, NHB is looking to revive the secondary mortgage market in the country, so as to add depth to the overall housing finance system.

One of the biggest challenges facing the housing finance industry today is the lack of formal credit flow to the lower income segments for their housing needs. This has resulted in a huge shortage of housing for these segments, and a multi-pronged effort is required to address the problem in all its dimensions. Among other things, the recently set up ‘Credit Risk Guarantee Fund Trust for Low Income Housing’, established by the Government of India to be administered by NHB, is expected to leverage institutional financing for the smaller borrowers.

The housing finance market in India is one of the important sectors of the country owing to its linkages and interconnectedness with the other segments of the economy. The market today stands poised for a major paradigm change in terms of institutional depth, product range, competition and consumer choice. Investments in housing have the potential to stimulate the economy and refuel economic growth.  On the back of the growing institutional depth in the housing finance market, the  coming years hold the promise of huge expansion in housing investments, leading to increased home ownership among all segments of the population.

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