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The National Housing Bank (NHB) is the apex financial institution in India established to promote and regulate the housing finance sector. It was set up in 1988 under the National Housing Bank Act, 1987, as a wholly-owned subsidiary of the Reserve Bank of India (RBI). However, since 2019, the NHB is wholly owned by the Government of India.
For UPSC aspirants, understanding NHB is crucial, as it ties into topics such as the Indian economy, housing policies, and financial institutions.
Inception:
The NHB was established on July 9, 1988, following recommendations of the Working Group on the Establishment of a National Housing Bank under Dr. C. Rangarajan.
Objective:
To act as a principal agency to promote housing finance institutions, provide financial support to the housing sector, and regulate housing finance companies (HFCs).
Ownership Changes:
The NHB was created to address the housing finance challenges in India. Its primary objectives include:
Promotion of Housing Finance Institutions:
Support to Housing and Real Estate Development:
Regulation of Housing Finance Companies (HFCs):
Refinancing of Housing Loans:
Development of Housing Finance Market:
Refinancing Operations:
NHB provides refinance assistance to eligible institutions, including:
Direct Financing:
While the NHB primarily focuses on refinancing, it also provides direct financial assistance for specific housing projects, especially for affordable housing.
Regulation of HFCs:
The NHB regulates and supervises HFCs to ensure financial stability and consumer protection. This includes:
Policy Formulation:
It advises the government on housing policies and works with stakeholders to implement housing schemes effectively.
Promotion of Affordable Housing:
The NHB plays a key role in implementing government schemes, such as:
Golden Jubilee Rural Housing Finance Scheme (GJRHFS):
Aimed at increasing housing finance access in rural areas.
Urban Housing Schemes:
Encourages development of housing projects in urban areas, targeting low and middle-income groups.
Credit Linked Subsidy Scheme (CLSS):
Affordable Housing Fund (AHF):
Green Housing Initiatives:
Promotion of Affordable Housing:
Boosting Real Estate Sector:
Employment Generation:
Financial Stability:
Support for Rural Housing:
High Housing Demand:
Regulation of HFCs:
Rural Housing Finance:
Dependence on Borrowings:
Economic Disruptions:
Ownership Transfer (2019):
The Government of India acquired full ownership of NHB from the RBI to strengthen its role in housing finance.
Focus on Affordable Housing:
NHB has intensified its support for affordable housing projects, aligning with the government’s “Housing for All by 2022” mission.
Green Finance Initiatives:
Promotes eco-friendly housing and energy-efficient construction practices.
Indian Economy:
Government Policies:
Financial Institutions:
Urbanization and Infrastructure:
Current Affairs:
Prelims Question:
The National Housing Bank is:
a) A subsidiary of the Reserve Bank of India
b) Wholly owned by the Government of India
c) A department under the Ministry of Housing and Urban Affairs
d) None of the above
(Answer: b)
Mains Question:
Discuss the role of the National Housing Bank in promoting affordable housing in India. What are the major challenges it faces, and how can these be addressed?
The National Housing Bank plays a pivotal role in addressing India’s housing challenges by promoting housing finance, regulating HFCs, and supporting government housing schemes. As the country strives to achieve its “Housing for All” mission, NHB’s efforts in fostering affordable housing, financial inclusion, and real estate development will remain vital. For UPSC aspirants, understanding NHB’s significance offers insights into India’s economic, social, and urban development policies.
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