The document discusses the history and development of housing finance in India. It explains that the Housing Development Finance Corporation was established in 1977 by the government to boost investment in housing. It also discusses the establishment of the National Housing Bank in 1998 by the Reserve Bank of India to provide housing finance to all sections of society. The National Housing Bank functions as a regulatory body for housing finance companies and issues guidelines and directions for them. It also discusses various types of appraisals conducted and fees charged by housing finance companies for disbursing housing loans.
About the housing finances in India. About the national hosing bank and the functions of it. Then about the micro housing finance corporation and the types of loans, housing and its development. Discussion on the urban infrastructure.
About the housing finances in India. About the national hosing bank and the functions of it. Then about the micro housing finance corporation and the types of loans, housing and its development. Discussion on the urban infrastructure.
Housing finance refers to finance provided to individuals or group of individuals for purchasing/building a house. RBI has given a free rein to banks to decide on the age of dwelling, repayment schedule, margin and security with the approval of their board. There are three types of housing finance namely direct finance, indirect finance and supplementary finance. Housing loan is normally 80 to 85% of the cost of flat. However, some banks provide 100% amount. Banks charge fixed interest rate or a floating rate on housing loans.
What is Venture Capital?
• Venture capital means funds made available for start-up firms and small businesses with exceptional growth potential.
• Venture capital is long term risk capital to finance high technology projects which involve risk but at the same time has strong potential for growth.
Definition
• The SEBI defined Venture Capital fund in its regulation 1996 as ‘a fund established in the form of a company or trust which raises money through loans, donations, issue of securities or units as the case may be & makes or proposes to make investments in accordance with the regulations’.
Rules by SEBI
VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996.
The following are the various provisions:
A venture capital fund may be set up by a company or a trust, after a certificate of registration is granted by SEBI on an application made to it. On receipt of the certificate of registration, it shall be binding on the venture capital fund to abide by the provisions of the SEBI Act, 1992.
A VCF may raise money from any investor, Indian, Non-resident Indian or foreign, provided the money accepted from any investor is not less than Rs 5 lakhs. The VCF shall not issue any document or advertisement inviting offers from the public for subscription of its security or units
SEBI regulations permit investment by venture capital funds in equity or equity related instruments of unlisted companies and also in financially weak and sick industries whose shares are listed or unlisted
At least 80% of the funds should be invested in venture capital companies and no other limits are prescribed.
SEBI Regulations do not provide for any sectoral restrictions for investment except investment in companies engaged in financial services.
ADVANTAGES OF VENTURE CAPITAL
• Provide large sum of equity finance.
• Venture Capitalist are rewarded by business success & the capital gain.
• Able to bring wealth and expertise to your company
• The Venture Capitalist also has a wide network of contacts.
• Providing additional funds.
DISADVANTAGES OF VC
• Lengthy and complex process (needs detailed business plan, financial projections and etc.)
• In the deal negotiation stage, you will have to pay for legal and accounting fees
• Investors become part owners of your business - founder loss of autonomy or control
A Study on Housing Finance in India with Special Reference to LIC Housing Fin...ijtsrd
Housing Finance in India during the last decade has gone through many changes. From very low exposure to the housing sector initially, banks have gone very fast in extending credit to this sector which has witnessed unprecedented expansion. With urbanization and higher level of economic growth, it is quiet natural that the housing sector has received a enormous growth. However, in the recent years the banks have gone faster than what could be a reasonably justified in financing this sector. At the international level, the speed at which banks have rushed to this sector, has resulted in financial crisis causing great damages to the stability of the banking system. Housing is one of the most important that we human beings need. Adequate housing is essential for human survival with dignity. There are many things that we would find difficult, if not impossible to do without good-quality housing. Housing shortage is an universal phenomenon. It is more acute in developing countries. The housing scenario has become more critical in India in recent years. India has initiated so many housing reform that has taken many forms and manifestations characterized by the reduction in social allocation, cutbacks in public funding and promotion of a real estate culture in close partnership between the state and private actors. Mortgage financing markets can play an important role in stimulating affordable housing markets and improving housing quality in many countries. Unfortunately, these are still in infancy in India. This lack of development often translates into lower homeownership rates or poor housing quality. Most of these problems stem from the central dilemma that the resources are always too limited and housing development heavily depend on the financial institutions such as banks, credit corporations and development banks for the supply of finance to meet their daily financial needs. Against this backdrop, this paper will assess basic hurdles of Indian financing system. Dr Bandaru Appala Satya Murthy"A Study on Housing Finance in India with Special Reference to LIC Housing Finance Limited" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-1 , December 2017, URL: http://www.ijtsrd.com/papers/ijtsrd5966.pdf http://www.ijtsrd.com/management/marketing/5966/a-study-on-housing-finance-in-india-with-special-reference-to-lic-housing-finance-limited/dr-bandaru-appala-satya-murthy
This is presentation being presented by Shivi Aggarwal, Radhika Gupta, Sweta Agarwal and Madhusudan Partani Students of FORE School of Management ( FMG-18).
It has Guidelines of HFC, Busniess Model of HDFC
This presentation will give you an idea about merchant banking and it's origin. You can understand the meaning, advantages and disadvantages of marchant banking and also discussed the functions of marchant banks.
Housing finance refers to finance provided to individuals or group of individuals for purchasing/building a house. RBI has given a free rein to banks to decide on the age of dwelling, repayment schedule, margin and security with the approval of their board. There are three types of housing finance namely direct finance, indirect finance and supplementary finance. Housing loan is normally 80 to 85% of the cost of flat. However, some banks provide 100% amount. Banks charge fixed interest rate or a floating rate on housing loans.
What is Venture Capital?
• Venture capital means funds made available for start-up firms and small businesses with exceptional growth potential.
• Venture capital is long term risk capital to finance high technology projects which involve risk but at the same time has strong potential for growth.
Definition
• The SEBI defined Venture Capital fund in its regulation 1996 as ‘a fund established in the form of a company or trust which raises money through loans, donations, issue of securities or units as the case may be & makes or proposes to make investments in accordance with the regulations’.
Rules by SEBI
VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996.
The following are the various provisions:
A venture capital fund may be set up by a company or a trust, after a certificate of registration is granted by SEBI on an application made to it. On receipt of the certificate of registration, it shall be binding on the venture capital fund to abide by the provisions of the SEBI Act, 1992.
A VCF may raise money from any investor, Indian, Non-resident Indian or foreign, provided the money accepted from any investor is not less than Rs 5 lakhs. The VCF shall not issue any document or advertisement inviting offers from the public for subscription of its security or units
SEBI regulations permit investment by venture capital funds in equity or equity related instruments of unlisted companies and also in financially weak and sick industries whose shares are listed or unlisted
At least 80% of the funds should be invested in venture capital companies and no other limits are prescribed.
SEBI Regulations do not provide for any sectoral restrictions for investment except investment in companies engaged in financial services.
ADVANTAGES OF VENTURE CAPITAL
• Provide large sum of equity finance.
• Venture Capitalist are rewarded by business success & the capital gain.
• Able to bring wealth and expertise to your company
• The Venture Capitalist also has a wide network of contacts.
• Providing additional funds.
DISADVANTAGES OF VC
• Lengthy and complex process (needs detailed business plan, financial projections and etc.)
• In the deal negotiation stage, you will have to pay for legal and accounting fees
• Investors become part owners of your business - founder loss of autonomy or control
A Study on Housing Finance in India with Special Reference to LIC Housing Fin...ijtsrd
Housing Finance in India during the last decade has gone through many changes. From very low exposure to the housing sector initially, banks have gone very fast in extending credit to this sector which has witnessed unprecedented expansion. With urbanization and higher level of economic growth, it is quiet natural that the housing sector has received a enormous growth. However, in the recent years the banks have gone faster than what could be a reasonably justified in financing this sector. At the international level, the speed at which banks have rushed to this sector, has resulted in financial crisis causing great damages to the stability of the banking system. Housing is one of the most important that we human beings need. Adequate housing is essential for human survival with dignity. There are many things that we would find difficult, if not impossible to do without good-quality housing. Housing shortage is an universal phenomenon. It is more acute in developing countries. The housing scenario has become more critical in India in recent years. India has initiated so many housing reform that has taken many forms and manifestations characterized by the reduction in social allocation, cutbacks in public funding and promotion of a real estate culture in close partnership between the state and private actors. Mortgage financing markets can play an important role in stimulating affordable housing markets and improving housing quality in many countries. Unfortunately, these are still in infancy in India. This lack of development often translates into lower homeownership rates or poor housing quality. Most of these problems stem from the central dilemma that the resources are always too limited and housing development heavily depend on the financial institutions such as banks, credit corporations and development banks for the supply of finance to meet their daily financial needs. Against this backdrop, this paper will assess basic hurdles of Indian financing system. Dr Bandaru Appala Satya Murthy"A Study on Housing Finance in India with Special Reference to LIC Housing Finance Limited" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-1 , December 2017, URL: http://www.ijtsrd.com/papers/ijtsrd5966.pdf http://www.ijtsrd.com/management/marketing/5966/a-study-on-housing-finance-in-india-with-special-reference-to-lic-housing-finance-limited/dr-bandaru-appala-satya-murthy
This is presentation being presented by Shivi Aggarwal, Radhika Gupta, Sweta Agarwal and Madhusudan Partani Students of FORE School of Management ( FMG-18).
It has Guidelines of HFC, Busniess Model of HDFC
This presentation will give you an idea about merchant banking and it's origin. You can understand the meaning, advantages and disadvantages of marchant banking and also discussed the functions of marchant banks.
9 Mortgage MarketsCHAPTER OBJECTIVESThe specific objectives of.docxblondellchancy
9 Mortgage Markets
CHAPTER OBJECTIVES
The specific objectives of this chapter are to:
· ▪ provide a background on mortgages,
· ▪ describe the common types of residential mortgages,
· ▪ explain the valuation and risk of mortgages,
· ▪ explain mortgage-backend securities, and
· ▪ explain how mortgage problems led to the 2008- 2009 credit crisis.
9-1 BACKGROUND ON MORTGAGES
A mortgage is a form of debt created to finance investment in real estate. The debt is secured by the property, so if the property owner does not meet the payment obligations, the creditor can seize the property. Financial institutions such as savings institutions and mortgage companies serve as intermediaries by originating mortgages. They consider mortgage applications and assess the creditworthiness of the applicants.
The mortgage represents the difference between the down payment and the value to be paid for the property. The mortgage contract specifies the mortgage rate, the maturity, and the collateral that is backing the loan. The originator charges an origination fee when providing a mortgage. In addition, if it uses its own funds to finance the property, it will earn profit from the difference between the mortgage rate that it charges and the rate that it paid to obtain the funds. Most mortgages have a maturity of 30 years, but 15-year maturities are also available.
9-1a How Mortgage Markets Facilitate the Flow of Funds
WEB
www.mbaa.org
News regarding the mortgage markets.
The means by which mortgage markets facilitate the flow of funds are illustrated in Exhibit 9.1. Financial intermediaries originate mortgages and finance purchases of homes. The financial intermediaries that originate mortgages obtain their funding from household deposits. They also obtain funds by selling some of the mortgages that they originate directly to institutional investors in the secondary market. These funds are then used to finance more purchases of homes, condominiums, and commercial property. Overall, mortgage markets allow households and corporations to increase their purchases of homes, condominiums, and commercial property and thereby finance economic growth.
Institutional Use of Mortgage Markets Mortgage companies, savings institutions, and commercial banks originate mortgages. Mortgage companies tend to sell their mortgages in the secondary market, although they may continue to process payments for the mortgages that they originated. Thus their income is generated from origination and processing fees, and not from financing the mortgages over a long-term period. Savings institutions and commercial banks commonly originate residential mortgages. Commercial banks also originate mortgages for corporations that purchase commercial property. Savings institutions and commercial banks typically use funds received from household deposits to provide mortgage financing. However, they also sell some of their mortgages in the secondary market.
Exhibit 9.1 How Mortgage Markets Facilitate t ...
MONEY MARKET FUND REFORM: AN ALTERNATIVE TO THE SEC’S PROPOSALMercatus Center
Money market fund reform remains one of the most prominent unsettled issues in financial markets regulation after the 2008 crisis. The Securities and Exchange Commission’s most recent effort which aims at balancing reforms with a desire to preserve the major benefits of money market funds has not achieved that objective. The Mercatus Center at George Mason University invites you to join Hester Peirce and Robert Greene for a Regulation University program that examines the need for money market fund reform, identifies potential problems with the SEC’s proposal, and offers recommendations for meaningful reform.
This program will highlight the key findings from Ms. Peirce and Mr. Greene’s recent public interest comment, Money Market Fund Reform; Amendments to Form PF, and provide specific suggestions for money market fund reform.
How to Make a Field invisible in Odoo 17Celine George
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Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
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2. • Due to scarcity of Finance, Housing remains a
distant dream for many people.
• To boost investment in the housing industry,
the Government established the Housing
Development Finance Corporation in 1977.
3. • Numerous tax concessions were announced
like currently interest and repayment of
borrowed capital and capital gains rollovers.
4. NHB
• In July, 1998, the government announced the
setting up of National Housing Bank fully
owned by RBI with the objective of providing
Housing finance to all sections of society.
• The NHB also functioned as a regulatory body
for the housing finance industry and issued
regulatory directions and guidelines to the
Housing Finance Companies (HFCs)
5. • Till the 1990s , it was largely a seller’s market.
• With the entry of commercial banks and
private sector banks, marketing began to play
an important role.
• HFCs marketed their schemes through agents
known as DSAs (Direct Selling Agents)
6. Disbursing a house loan
• The first step is determining whether or not,
the applicant satisfies the eligibility criteria.
• HFCs consider factors such as an applicant’s
age, income level and stability of income
streams.
• Generally three types of appraisal are
conducted by the HFCs
7. Credit Appraisal
• This is conducted to assess the applicant’s
repayment capacity over the loan tenure.
• The factors considered are:
• Income
• Age
• Academic Background
• Employment stability
9. Legal Appraisal
• The documents submitted are verified by a
lawyer to confirm whether the holder will be
able to generate a mortgage in favor of the
HFC or not.
10. Technical Appraisal
• The applicant’s original documents are
verified.
• All other information submitted is also
verified.
• Checks to ensure of the quality of the material
of the house.
11. Loan amount
• Loan amount can be disbursed in entirety or
in instalments.
• Repayments are by way of EMIs
• Disbursement is generally done on the basis of
fixed or floating rate of interest.
16. • Bank may waive any of these fees for specific
categories of customers.
• The registration papers of the property are
held by the HFC till the loan is fully repaid.
17. • The primary source of funds for any HFC is the
interest on loans disbursed.
• HFCs make money on the spread between the
cost at which they source their funds and the
rates charged to customers.
18. Fannie Mae
• Fannie Mae was a Depression-era creation of the
federal government that had been charged with
establishing a secondary market for home loans.
• By purchasing qualifying residential mortgages
• from home-loan issuers, it provided these
institutions with funds for the continued issuance of
mortgages, thereby promoting the government’s
goal of increased homeownership.
19. • In November 1931, President Herbert Hoover
outlined a plan for the creation of twelve
regional Federal Home Loan Banks (FHLBs)
with the capacity to lend upwards of $2 billion
to member mortgage institutions.
20. Fannie Mae.
• Originally chartered as the National Mortgage
Association of Washington in February 1938,
the agency was renamed the Federal National
Mortgage Association (FNMA).
• Over time, the FNMA would come to be
known also as Fannie Mae.
21. • The FNMA opened its doors with “an initial capital of
$10 million” supplied by the Reconstruction Finance
Corporation, its supervising agency.
• Its role was primarily buying, holding, and selling
“FHA-insured mortgage loans which had been
originated by private lenders,” thereby allowing the
latter to remove the loans from their books and use
the income to finance further mortgages
22. Federal Housing Administration (FHA).
• The FHA challenged this status quo. For a small
premium (fee), it offered to insure “the repayment
of principal and interest” on any mortgage “held by
any authorized lending institution,”
• but only so long as the mortgage conformed to FHA
standards.
• To be eligible for FHA insurance, properties needed
to be examined by a local FHA agent.
23. Other government-sponsored
enterprises (GSEs)
• The Federal Home Loan Mortgage
Corporation (FHLMC), or Freddie Mac.
• The Government National Mortgage
Association (GNMA), also known as Ginnie
Mae
25. 2000-2001
• Dot Com Burst and Sept 9/11 attacks
• US Govt. adopted a policy of Credit Driven Consumption led
Growth.
• Interest Rates were slashed to ease liquidity from 2001
• By 2003 the Fed Funds rate (Fed rate) had gone down to as
low as 1%.
• Lower interest rates made Home loans cheaper
• High demand in Housing Markets lead to Real Estate Prices
rallying.
26. Aggressive Lending
• Real Estate as an asset class became very attractive.
• Returns generated were very high.
• Banks were Flush with liquidity because of Low Fed
rate.
• Prime rate went down to 4.25% in January, 2003
from 9.05% in January 2001.
• However Prime market did not give the banks the
high credit growth they had targeted.
• Started lending to subprime borrowers.
27. Aggressive Lending
• Bankers assumed real estate rates were set to
appreciate further.
• Aggressive Lenders went to the extent of
Financing with more than 100% of the Asset
Price.
• Subprime borrowers were offered Mortgage
Loans as ARMs.
• Higher Risks – Higher Premiums.
28. Mortgage Brokers
• Lending operations were carried out by
Mortgage Brokers.
• Were paid Commission for underwriting
Mortgages
• Were not responsible for recovering those
Loans in case of a default.
• Often underwrote Mortgages even when
there was no proper documentation.
29. SECURITIZATION ROUTE
• Banks took the Securitization route to transfer
the Risk off their Balance Sheets.
• Sold the Mortgage Loans to GSEs and
Investment Banks
• Funds generated from securitization were
again extended as Mortgage Loans.
30. BORROWER BANK INVESTOR
SECURITISATION MODEL
LOAN TRANSACTION
SALE OF LOAN BACKED
SECURITIES
BANK ORIGINATES AND ADMINISTERS THE LOAN. BANK SELLS LOAN TO
SECURITISATION VEHICLE WHICH ISSUES LOAN ASSET BACKED SECURTIES.
FUNDING AND CREDIT RISK OF BORROWER IS BORNE BY INVESTOR.
SECURITISATION
VEHICLE
SALE OF LOAN TO
SECURITISATION VEHICLE
31. MBS
• Banks created MBS – A Bond.
• Were entitled to cash flows from the
Mortgage payments.
• Bunched MBS into several Tranches – Pooling
and Tranching.
• Many Hedge Funds and Institutions invested
in High Risk – High Return MBS.
32. FROM MBS TO CDS
• An MBS Investor could buy a CDS issued by other FI’s
by paying a premium.
• In return the FI guaranteed the cash flows from the
MBS.
• CDS market was unregulated.
• Till 2000 the Number of CDS players was limited.
• Early 2000 saw a number of players including
Investment Banks, insurance companies and
speculators entering the CDS Market.
33. What is Credit default swap?
Credit default swaps allow one party to "buy"
protection from another party for losses that might
be incurred as a result of default by a specified
reference credit (or credits).
The "buyer" of protection pays a premium for the
protection, and the "seller" of protection agrees to
make a payment to compensate the buyer for losses
incurred upon the occurrence of any one of several
specified "credit events."
34. BORROWER BANK
INVESTOR/
OTHER BANK
RISK TRANSFER MODEL
LOAN TRANSACTION CREDIT DEFAULT SWAP OR
CREDIT LINKED NOTE
BANK ORIGINATES, FUNDS AND ADMINISTERS THE LOAN. CREDIT RISK OF
BORROWER IS TRANSFERRED TO INVESTORS OR OTHER BANKS.
35. Example
Suppose Bank A buys a bond which issued by a Steel
Company.
To hedge the default of Steel Company:
Bank A buys a credit default swap from Insurance
Company C.
Bank A pays a fixed periodic payments to C, in exchange
for default protection.
36. Exhibit
Credit Default Swap
Bank A Buyer
Insurance Company C
Seller
Steel company
Reference Asset
Contingent Payment On
Credit Event
Premium Fee
Credit Risk
37. The Bubble
• Estimated size of CDS Market in 2000 was USD 900
Billion.
• Estimated size of CDS Market in 2007 ballooned to
USD 45 Trillion.
• This was three times the size of the GDP of USA.
38. 2003
• US Proposed Budget for the IRAQ war – USD 60
Billion
• Actual expenditure had reached over USD 500
Billion.
• Heavily borrowed short term funds.
• Had to rely on the Money Market.
• Allan Greenspan – US Federal Reserve Chairman –
increased interest rates.
39. 2003 - 2006
• In 2003 the average short term borrowing
rates on three month Treasury Bill was 1%
when the average 10 year T-Bill rate was 4%.
• In 2006, the average three month Treasury Bill
rate went up to 4.85% whereas the average
10 year T-Bill rate was 4.79%.
• Normally short term rates are less than long
term rates.
40. IMPACT
• The cost of funds for lending institutions increased.
• They raised the rates on ARM.
• With increasing interest rates, the housing market
started witnessing a decline in Demand.
• Liquid money started flowing into commodities.
• Led to a surge in commodity prices and therefore
Inflation.
• To control Inflation, Interest rates were increased
further.
41. IMPACT
• Borrowers started defaulting on their
payments because of increasing interest rates.
• Losses for Investors and institutions dealing in
MBS.
• Rating agencies downgraded several MBS.
• This made the MBS Market illiquid.
42. IMPACT
• Investment Banks had to face significant losses.
• Decline in share prices.
• Few of them which had invested heavily started
defaulting on their obligations.
• FI’s which had underwritten CDS faced the pressure
of payments.
• This led to Bankruptcies of several FI’s involved in the
Trading of MBS and CDS.
• Led to a liquidity crunch and the subprime crisis.
43. TARP
• The Troubled Asset Relief Program (TARP) is a
program of the United States government to
purchase assets and equity from financial institutions
in order to strengthen its financial sector.
• It is the largest component of the government's
measures in 2008 to address the subprime mortgage
crisis.
• TARP allows the United States Department of the
Treasury to purchase or insure up to $700 billion of
"troubled" assets.
44. IMPACT ON INDIA
Indicator Period 2007-08 2008-09
Growth, per cent
Real GDP Growth April-December 9.0 6.9
Industrial
production
April-February 8.8 2.8
Services April-December 10.5 9.7
Exports April-March 28.4 6.4
Imports April-March 40.2 17.9
GFD/GDP April-March 2.7 6.0
Stock Market
(BSE Sensex)
April-March 16,569 12,366
Rs.per US$ April-March 40.24 45.92
45. National Housing Bank
• NHB was set up in 1988.
• It is the principal housing finance agency in
the country.
47. Promotional Role
• The promotional role includes
• promotion of HFIs/HFCs
• Coordination with Government and other
agencies in securing necessary amendments
to the existing laws to remove impediments in
the housing sector
48. Regulatory
• The regulatory powers exercised earlier by the
RBI relating to HFCs are now the domain of
the NHB.
• It regulates them through directions and
guidelines.
49. Financial
• The financial support by the NHB to HFCs is in
the form of equity capital and refinance
promotion of loan linked savings instruments
and mortgage backed securitization.
50. NHB Directions cover
• Registration
• Net owned funds
• Period of deposits
• Ceiling on Deposits
• Information in the reports of the Board of
Directors
• Accounts and Auditor Reports etc
51. Acceptance of Public Deposits
• Any HFC having Net owned funds of less than
Rs 25 lakhs cannot accept public deposits.
• A HFC having NOF of Rs 25 lakhs and above
and having a minimum credit rating of ‘A’
from any of the approved rating agencies as
well as complying with all the prudential
norms, can accept/renew deposits upto five
times its NOF.
52. • In the absence of credit rating, there is a
ceiling of two times the NOF or Rs 10 crore,
subject to
• Compliance with prudential norms
• Capital adequacy ratio of 15 per cent and
more.
53. Mortgage Backed Securitization
• Packaging of designated pools of Mortgage
loans originated by a primary lending
institution/HFC and the subsequent sale of
these packages to the investors in the form of
securities which are collateralized by the
underlying mortgages and associated Income
streams.
54. • Sale of specific loans to a special purpose
Vehicle.
• Which in turn issues securities
• The securities are rated by an independent
rating agency.
55. • Government has enjoined upon NHB to play a
lead role in starting MBS and development of
a secondary mortgage market in the country.
• It placed the first ever MBS issue successfully
in the Indian Capital Market during August,
2000.
56. • The NHB will purchase from the originator, a
pool of retail housing loans that constitute
receivables.
• The individual loans repayable in EMIs will
then be packaged and offered to investors by
way of securities in the form of pass through
certificates(PTCs) without recourse to the
issuer.
57. • The issue proceeds will then be used by NHB
to pay part consideration for the receivables
purchased to the originator.
• NHB will appoint itself as the sole Trustee and
will hold and administer the receivables as
Trust Property for the benefit of PTC holders.
• The originator will continue to administer the
housing loans as Servicing and Paying Agent
(S&PA)
58. HUDCO
• Established on 25th
April, 1970
• Fully owned Government of India Enterprise
• Principal mandate was to ameliorate the
housing conditions of the Low Income Group
and economically weaker sections.
• To finance or undertake
• Housing and Urban Development
programmes.
59. Questions for Revision
• What are the different types of appraisals
carried out by Housing Finance Companies ?
Describe some of the fees charged ?
• Write a short note on
– Securitization
– Mortgage backed Securities
– Subprime Crisis
– National Housing Bank