National Housing Bank (NHB) plays an important role in the growth of housing finance institutions in India in many ways. A few of them are discussed here.
1. Growth activity: National housing bank promotes, establishes and supports housing finance institutions.
2. It grants loans and advances: There is a fundamental difference between loans and advances. Loans can be granted against pledge of jewels or mortgage of property, and the purpose of availing loan will not be questioned by the lender. Advances are meant for a specific purpose and the amount will be sanctioned periodically for a specific purpose and the amount should be spent only for that purpose. The security for the advance will be the asset that is created through the advance. Housing finance or home finance is the provision of finance to such institutions which are involved in housing finance.
NHB purchases stocks shares, bonds, and other securities of companies involved in housing finance.
3. Guarantees for loan: NHB Guarantees for the loan taken by housing finance companies from the open market.
4. NHB Underwrites for the issue of securities of housing finance institutions.
5. National Housing Bank draws, accepts, discounts and re-discounts bills of exchange for housing finance.
6. NHB buys or sells or deals in mortgage of immovable properties belonging to housing finance institutions.
7. NHB may write off or set aside loans belonging to housing financing companies
8. National housing bank Promotes mutual funds for undertaking housing finance.
9. NHB undertakes house mortgage insurance.
10. NHB Promotes mortgage banks or societies for providing housing finance.
11. It Undertakes research and survey on construction activities.
12. It formulates various schemes for the extension of housing credit.
13. National housing bank plays an important role in formulating housing schemes for EWS (economically weaker sections) – single tenement and radial houses.
14. National housing bank Co-ordinates with LIC, UTI, GIC and other financial institutions.