History of National Housing Bank (NHB)
Under the Sites and Service Scheme of the World Bank, the borrower’s place of dwelling will be nearer to his work spot and both are developed simultaneously. In view of the World Bank assistance, it was felt necessary to promote an apex financial institution for providing housing finance. Hence, in the year 1988, RBI promoted National Housing Bank (NHB) as an apex institution i.e., the leading institution for providing housing finance in the country. Since then, NHB has grown manifold which is evident from the promotion of number of housing finance institutions and the construction of more number of housing colonies.
In India, there are a number of housing finance institutions which belongs to public, private, co-operative and joint sector institutions.
Creation of National Housing Bank
With the creation of National Housing Bank, housing finance is streamlined and the institutions dealing in housing finance are also regulated. National Housing Bank exercises its powers on various housing finance institutions extending housing finance. Today, with interest rate being decided by the market, housing finance has not only become cheaper but is also made available to a number of institutions with simplified procedures.
Capital and Management of National Housing Bank
National Housing Bank came into existence with the passing of the National Housing Bank Act in the year 1987. It is a company and it has its registered office in Bombay. The authorized and paid up capital of National housing bank are Rs. 350 crores, fully subscribed by Reserve Bank of India. The authorized capital can be increased upto Rs. 2000 crores by the government in consultation with RBI. 51% of its issued capital is held by Reserve Bank of India, the government, public sector banks and other financial institutions.
The Board of Directors exercises all the powers according to the provisions of NHB Act. The Board will consist of the chairman, managing director and additional directors. Directors represent different categories.
How are NHB Directors appointed?
- Two directors from the field of housing, architecture, engineering, finance, sociology, law, etc.
- Two directors from the working institutions which are providing the housing finance.
- Two directors elected by shareholders other than the RBI and the government.
- Two directors selected by RBI.
- Three directors appointed by the central government.
- Two directors appointed by the state government.
- All the directors excepting the RBI directors and those elected by shareholders are appointed by the government in consultation with RBI.
So, the Board of NHB consists totally of a managing director with 13 directors.