National Housing Bank (NHB) 2024: The operations of NHB

National Housing Bank (NHB): In India there was no institutional arrangement for long term financing of individuals housing for a long time. This short coming was identified by the Sub-Group

Raju Choudhary

National Housing Bank

National Housing Bank (NHB): In India there was no institutional arrangement for long term financing of individuals housing for a long time. This short coming was identified by the Sub-Group on Housing Finance for the Seventh Five Year Plan (1985- 90) as a stumbling block, hindering the progress of the housing sector and recommended setting up of a nodal, national level institution.

National Housing Bank (NHB)

The Government of India, accepted the recommendation of the sub-group of the planning commission and a High Level Group under the Chairmanship of Dr. C. Rangarajan, the then Deputy Governor of RBI, was set-up to examine the proposal. The high level group recommended the setting up of National Housing Bank (‘NHB’) as an autonomous housing finance institution which as accepted by the Government.

While presenting the union budget in 1987-88 the Hon’ble Prime Minister of India, on February 28, 1987 announced the decision to establish the NHB as an apex level institution for housing finance.

Following that, the legislative process for passing an Act was in progress and NHB bill was passed in the winter session of 1987 and in December, 1987, became an Act of Parliament. The National Housing Policy, formulated in 1988envisaged the setting up of NHB as the Apex level institution for housing. All these steps resulted in setting up of NHB on July 9, 1988 under the NHB Act, 1987.NHB is wholly owned by Reserve Bank of India, which contributed the entire paid-up capital.


The Preamble of the National Housing Bank Act, 1987 describes the basic functions of the NHB as –“… to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support to such institutions and for matters connected therewith or incidental thereto …”.

According to Section 14 of NHB Act, some of the important businesses which NHB is permitted to transact, are the following:

“(a) promoting, establishing, supporting or aiding in the promotion, establishment and support of housing finance institutions;

(b) making of loans and advances or rendering any other form -of financial assistance whatsoever to housing finance institutions and scheduled banks,[or to any authority established by or under any Central, State or Provincial Act and engaged in slum clearance]…….

(d) guaranteeing the financial obligations of housing finance institutions and underwriting the issue of stocks, shares, bonds debentures and securities of every other description of housing finance institutions……

(h) formulating one or more schemes, for the purpose of mobilisation of resources and extension of credit for housing…….

(i) formulating one or more schemes for the economically weaker sections of society which may be subsidised by the Central Government or any State Government or any other source… etc.”

The operations of NHB include the following :

  • Raising resources from various sources including from general public.
  • Refinancing various Primary Lending Institutions.
  • Extending Project Finance in terms of Section 14 (ba) of the NHB Act, 1987 to various public agencies like State Housing Boards, State Slum Clearance Development Municipal Corporations, Urban Local Bodies, etc.
  • Registers, Regulates and Supervises Housing Finance Companies (HFC).
  • Provides Equity Participation to various HFC.
  • Participation in Government Schemes as a Nodal agency for the following schemes.
  • NHB introduce 1% interest subvention scheme on 1.10.2009

NHB is one of the two nodal agencies for the Urban Poor (ISHUP) and heating and solar lighting systems in renamed it as Rajiv Rinn Yojana (RRY)

National Housing Bank has been designated as an agency for administering and monitoring Capital Subsidy Scheme for Installation of Solar Water Heating and Solar Lighting Systems in Homes.

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