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Mr S. Sridhar, Chairman and Managing Director of National Housing Bank

Our Bureau

Kolkata, June 27 National Housing Bank (NHB) is weighing the possibility of establishing a mortgage guarantee outfit as a joint venture with international partners.

NHB, which feels mortgage guarantee will spur the residential mortgage-backed securities market, plans to take up the plan in line with the RBI norms for setting up of mortgage guarantee institutions. Mortgage guarantee, said Mr S. Sridhar, CMD, NHB, will put in place a risk cover for lending entities against defaults in housing loans. The 2007-08 Budget, he mentioned, did refer to the issue of regulatory guidelines for mortgage guarantee as a preface to its launch.

The latest plan is one of several new initiatives that have been planned by NHB. In recent times, these have also included reverse mortgage loans (RML) for senior citizens. Guidelines for the latter have already been issued and RML is now being provided by some institutions. A counselling centre for senior citizens (who are often not eligible for mortgage loans) is being opened in Delhi, complete with a toll-free help line.

Rural housing loans

On another front, NHB will focus on what has been termed ‘productive housing in rural areas’, a programme based on the concept of SOHO (small office-home office). Loans are provided for construction and renovation of houses as well as the creation of various income-generating assets.

The idea is to provide loans to the rural poor, especially to families that are marginally above the poverty line. The need is to improve their habitat and working environment. The plan, it is also felt, will help improve productivity and savings. The programme will be put into effect in association with select banks and micro-finance institutions. NHB, which is entirely owned by the RBI, intends to act as an information hub for home finance in India, the CMD said.

Eyes Rs 7,500-cr borrowing

National Housing Bank plans to borrow about Rs 7,500 crore this year, a little less than what it raised from the market last year.

NHB, which mobilised Rs 10,000 crore in 2006-07 following the withdrawal of the facility to issue capital gains bond, will approach the market on the basis of the strengths it has developed, Mr Sridhar maintained.

NHB, which introduced re-finance on floating rate loans linked to PLR as well as market benchmark, has a number of investment proposals before it, including equity investment in housing finance companies engaged in rural housing.

It may invest a maximum 26 per cent in such companies – up to Rs 25 crore in a single allocation – and aim at disinvesting within seven years.

More Stories on : Housing Finance | Mortgage

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