NHB to tap capital market to augment resource base

EYEING HOUSING MICRO FINANCE: S. Sridhar, Chairman and Managing Director, National Housing Bank, interacting with The Hindu group of journalists in Chennai on Saturday.

EYEING HOUSING MICRO FINANCE: S. Sridhar, Chairman and Managing Director, National Housing Bank, interacting with The Hindu group of journalists in Chennai on Saturday.   | Photo Credit: — PHOTO: BIJOY GHOSH

K. T. Jagannathan & Shanthi Kannan

To work with banks, micro finance institutions to create a ‘refinance window’

CHENNAI: In a significant move, the National Housing Bank (NHB), a wholly-owned subsidiary of the Reserve Bank of India, has decided to tap public funds to diversify its resources base.

Indicating this in an interaction with journalists from The Hindu Group of publications here on Saturday, S. Sridhar, Chairman and Managing Director, said NHB would shortly launch a fixed deposit programme in the Indian market. NHB had been relying on market borrowings for its onward lending programmes. NHB, he said, had borrowed Rs. 13,200 crore from the market last year.

The Triple A ratings that NHB had got from all credit rating agencies would help it tap deposits at competitive rates, he felt. Being a subsidiary of the apex bank, NHB could not borrow from overseas markets since they involved repayment in foreign currency upon maturity. Queried on accessing NRI (non-resident Indian) deposits which were repaid in rupee upon maturity, he said NHB was working on ways to do it competitively.

Since NHB was not getting any concession from the Government, it had to go in for market borrowings, he said. To a question, Mr. Sridhar said banks and housing finance companies (which could also raise funds from the market) still sought funds from NHB for reasons such as meeting their short-term needs and balancing their assets and liabilities.

Micro finance

Mr. Sridhar said NHB was looking at housing micro finance.

The objective was to use the system adopted by banks in their micro financing activities. NHB would work in close co-operation with banks, non-Government organisations and micro finance institutions to create a ‘refinance window’ to direct the fund flow.

NHB was also considering setting up a separate mortgage guarantee company that would address the issue of loan defaults. This exercise would help banks to spread lending activities to across all segments and lower their risk, he added.

Mortgage depository

The CMD said NHB was working with the Government to set up a national mortgage depository, wherein loans taken against houses would be electronically linked to the property registrar. NHB was working with banks, housing finance institutions and other market players to format the information. This would have the potential to become a part of the e-governance programme of the Governments, he added. NBH was keen to ensure that the real estate agents/brokers were professionally organised.

In this context, the CMD hinted at qualification norms for all market players (as had been by Securities and Exchange Board of Indian in stock market). He also wanted the property valuation to be done with a professional touch.

NHB was planning to launch a residential property index for five cities. This would be released every six months and give a somewhat fair indication of the price movements in that city, he added. In two years, the index would cover 35 cities. He was hopeful that the index would be useful for investors, banks and others for their ‘collaterals.’ NHB was also planning to launch an interactive portal for consumers that would provide assorted info on the property market.

Recommended for you