National Housing Bank | Borrowing Powers | Rights exercised

In order to increase the available funds with NHB for the purpose of providing housing finance to various Housing finance companies, the NHB adopts the following methods of borrowing. The borrowing powers of NHB are given below.

Borrowing powers of NHB:

1. Issuing and selling of debentures and bonds of a long-term nature with the guarantee of central government.
2. NHB can borrow money from central government, banks, financial institutions and mutual funds, etc.
3. NHB can accept deposits which can be repaid after a stipulated period.
4. NHB can borrow from RBI under
   1. Loans and Advances and
   2. from National Housing Credit Fund, held by RBI.
5. In addition to the above mobilization, it can also borrow in foreign currency, either within or outside India with the permission of RBI and the Central government.

Rights exercised by National Housing Bank

The following are the rights exercised by NHB towards Housing finance companies.

1. All loans received by borrowing institutions, against the security of immovable assets will automatically be deemed to have been transferred to National Housing Bank until the repayment of such loan. As a result, in case of default, NHB can directly proceed against the immovable assets, i.e, it is similar to sub-mortgage.
2. NHB can transfer any of its rights as a mortgagee to any other institution such as Reserve Bank of India, Central government, LIC, etc. For example, if any individual fails to repay his housing loan, action can be taken by the government on the assignment of the mortgage by NHB in favor of the government.
3. NHB can take action against any borrowing individual from any of the HFCs as the right to take action is transferred or assigned in favor of NHB.
4. Exemption from registration: Normally, all mortgages are legal when they are registered and are enforceable in a court of law. In the case of NHB, they are totally exempted from registration of any document of any mortgage. This not only reduces the expenses but also the time involved in registration. It also enables NHB to take quick action against the defaulters.
5. Right of Recovery of loan: When any of the housing finance companies fails to repay the loan to NHB, the state government can be approached by NHB for the recovery of the loan which is treated as land revenue and top priority will be given by the state government concerned in the recovery of loan.