annual report 2010-2011 - national housing...

website : www.nhb.org.in

National Housing Bank

Annual Report2010-2011

jk"Vªh; vkokl cSadNATIONAL HOUSING BANK

vkj- oh- oekZv/;{k ,oa izcU/k funs'kd

R. V. VermaChairman & Managing Director

Hkkjrh; fjtoZ cSad dksj 5&, bafM;k gSfcVsV lsaVj] yks/kh jksM+] ubZ fnYyh&110003ds laiw.kZ LokfeRo esa nwjHkk"k ¼lh-½ 011&2464 2722 ¼ihch,Dl½ 011&2464 9031&35 QSDl % 011&2464 9030

rkj % fuokl cSad bZ&esy % [email protected] owned by Core 5-A, India Habitat Centre, Lodhi Road, New Delhi-110003Reserve Bank of India Phone : (D) 011-2464 2722 (PBX) 011-2464 9031-35 Fax : 011-2464 9030

Gram : NIWAS Bank email : [email protected]

^^cSad fgUnh esa i=kpkj dk Lokxr djrk gS**

No. NHB (ND)/CMD/12590/2011-12

Date : September 12, 2011

The Secretary, Government of India Ministry of Finance, Department of Economic Affairs,North Bock,New Delhi - 110 001

Dear Sir,

In accordance with the provision of sub-section(5) of Section 40 of the National Housing Bank (Amendment) Act 2000, I forward herewith a copy of the Annual Accounts of the National Housing Bank for the year 2010-11.

Yours faithfully,

(R.V. Verma)

Encls: Annual Accounts in bilingual format

Letter of Transmittal

102

jk"Vªh; vkokl cSadNATIONAL HOUSING BANK

vkj- oh- oekZv/;{k ,oa izcU/k funs'kd

R. V. VermaChairman & Managing Director

Hkkjrh; fjtoZ cSad dksj 5&, bafM;k gSfcVsV lsaVj] yks/kh jksM+] ubZ fnYyh&110003ds laiw.kZ LokfeRo esa nwjHkk"k ¼lh-½ 011&2464 2722 ¼ihch,Dl½ 011&2464 9031&35 QSDl % 011&2464 9030

rkj % fuokl cSad bZ&esy % [email protected] owned by Core 5-A, India Habitat Centre, Lodhi Road, New Delhi-110003Reserve Bank of India Phone : (D) 011-2464 2722 (PBX) 011-2464 9031-35 Fax : 011-2464 9030

Gram : NIWAS Bank email : [email protected]

^^cSad fgUnh esa i=kpkj dk Lokxr djrk gS**

No. NHB (ND)/CMD/12591/2011-12

Date : September 12, 2011

The Governor,Reserve Bank of India,Central Office, 18th Floor,Shahid Bhagat Singh Road,Mumbai - 400 023

Dear Sir, In accordance with the provision of sub-section(5) of Section 40 of the National Housing Bank (Amendment) Act 2000, I forward herewith a copy of the Annual Accounts of the National Housing Bank for the year 2010-11.

Yours faithfully,

(R.V. Verma)

Encls: Annual Accounts in bilingual format

Letter of Transmittal

103

R.V. VermaChairman & Managing Director

Management of National Housing Bank Board of Director

(As on September 6, 2011)Under Section 6 of the National Housing Bank Act, 1987

Dr. Errol D'Souza Vidyadhar K. Phatak R.V. Shastri Jayshree A. Vyas

Directors Appointed underSection 6 (1) (b) of NHB Act, 1987

Directors Appointed underSection 6 (1) (c) of NHB Act, 1987

H.R. Khan Lakshmi Chand

Directors Appointed underSection 6 (1) (d) of NHB Act, 1987

Arun Kumar Misra

Directors Appointed underSection 6 (1) (e) of NHB Act, 1987

Alok Nigam Sanjay Kumar Rakesh

G.S. Sandhu K. Phanindra Reddy

Directors Appointed underSection 6 (1) (f) of NHB Act, 1987

104

Management of National Housing Bank Executive Committee of Directors(As on September 6, 2011)

Audit Committee of the Board(As on September 6, 2011)

Remuneration Committee(As on September 6, 2011)

Risk Management Advisory Committee(As on September 6, 2011)

Board of Directors (As on September 6, 2011)Shri R.V.Verma, ChairmanUnder Section 6 of the

Shri H.R. KhanNational Housing Bank Act, 1987Shri Lakshmi Chand

Section 6(1) (a) Shri R. V. Verma Shri Alok NigamChairman and Managing Director Shri Sanjay Kumar Rakesh

Section 6(1) (b) Dr. Errol D'Souza Shri R.V. Shastri Professor, Economics Area,

Indian Institute of Management, Ahmedabad

Shri Vidyadhar K. Phatak Retd. Principal Chief, Town and

Shri Lakshmi Chand, ChairmanCountry Planning Division,

Shri H.R. KhanMumbai Metropolitan Region

Shri Alok NigamDevelopment Authority

Shri Sanjay Kumar RakeshSection 6(1) (c) Shri R.V. Shastri

Ms. Jayshree A. VyasEx-Chairman & Managing

Shri Vidyadhar K. PhatakDirector, Canara BankMs. Jayshree A. Vyas

Managing Director, Shri Mahila Sewa Sahakari Bank Ltd.

Section 6(1) (d) Shri H. R. KhanShri H.R. Khan, ChairpersonDeputy Governor, Reserve Bank

Shri Lakshmi Chandof IndiaShri Alok NigamShri Lakshmi Chand, IAS (Retd.)Shri R. V. ShastriDirector - Central Board of Dr. Errol D'SouzaDirectors,

Reserve Bank of IndiaSection 6(1) (e) Shri Arun Kumar Misra, IAS

Secretary to the Government of India,

Shri R. V. VermaMinistry of Housing & Urban ChairmanPoverty Alleviation

Shri Arnab RoyShri Alok Nigam, IASExecutive DirectorJoint Secretary to the

Shri V. R. Iyer Government of India, General Manager, Oriental Bank of CommerceMinistry of Finance

Shri K. RaghuramanShri Sanjay Kumar Rakesh, IAS Chartered Accountant & Retired Banker J o i n t S e c r e t a r y t o t h e

Dr. Surinder Singh YadavGovernment of India, Head, Department of Management Studies, IIT, Delhi Ministry of Rural Development

Shri R.S. GargSection 6(1) (f) Shri G. S. Sandhu, IAS General ManagerPrincipal Secretary to the Shri V.K. BadamiGovernment of Rajasthan,General ManagerHousing/Urban Development Shri R.K. PandeyDepartmentGeneral ManagerShri K. Phanindra Reddy, IASShri A. P. Saxena Secretary to the Government of

Deputy General ManagerTamil Nadu, Housing / Urban Development Department

okf"kZd fjiksZV 2010&11 ANNUAL REPORT 2010-11

105

CONTENTSI. Highlights: 2010-11 115

II. Global Economy: 2010-11 117

II.1 Strong Recovery amidst Economic Uncertainties 117

II.2 Financial Market Recovery 117

II.3 Recovery expected to Strengthen 118

III. Domestic Economy: 2010-11 118

IV. Union Budget 2011-12 120

V. Resource Mobilization 122

V.1 An Overview of the Market Position 122

V.2 Resources mobilised during the year 123

V.3 Sources of Funding 123

VI. Deployment of Funds 124

VI.1 Refinance Performance 124

VI.2 Project Finance Performance 125

VIII. Financial Performance: 2010-11 128

IX. Rural Housing Finance 128

IX.1 Rural Housing Fund 128

IX.2 Golden Jubilee Rural Housing Finance Scheme 129

X. Equity Participation 130

XI. Regulation and Supervision 131

XI.1 Regulation of Housing Finance Companies (HFCs) 131

XI.2 Supervision of HFCs 131

XI.3 Important Notifications 132

XI.4 Revised KYC Guidelines, Anti Money Laundering Measures, Fair

Practices Code & Asset-Liability Management System 132

XI.5 Coordination with Other Regulatory Authorities 132

XI.6 Other Activities 133

XII. Business Planning and Promotion Activities 133

XII.1 Complaint Redressal Mechanism 133

XII.2 Meeting with CEOs of HFCs and Senior Officials of PSBs including select RRBs 134

XII.3 World Habitat Day Celebrations 2010 134

XII.4 Development and Research Advisory Committee 135

XII.5 Promotional Programme for Energy Efficient New Residential Housing in India 135

XII.6 Risk Management 136

XII.7 Regional Office/Regional Representative Offices 136

XIII. Capacity Building 137

XIV. Corporate Communications 137

XV. Residential Mortgage Backed Securitization (RMBS) 138

XVI. New Initiatives 138

VII. Housing Micro Finance 126

XVI.1 File Tracking System 138

XVI.2 Refinance Scheme for Promoting Energy Efficient Housing 139

XVII.Reverse Mortgage Loan 139

XVII.1 Reverse Mortgage Loan (RML) 139

XVII.2 Reverse Mortgage Loan enabled Annuity (RMLeA) 139

XVII.3 Reverse Mortgage Counselling Centres 140

XVIII. Information Technology Initiatives 140

XVIII .1 Portals 140

XVIII.2 IT Projects 141

XVIII.3 Information Security 141

XIX. Development & Promotional Initiatives 142

XIX.1 Asia Pacific Union for Housing Finance (APUHF) 142

XIX.2 Study on Housing Finance Portfolio of Scheduled

Commercial Banks – Trend Analysis 2005-09 143

XIX.3 Study on Housing Finance Portfolio of Housing Finance Companies 145

XIX.4 Study on Affordable Housing and Housing Finance in the State of Rajasthan 145

XIX.5 Study on Impact Assessment of Rural Housing Fund 146

XIX.6 Study on the Impact Analysis of Housing Micro-Finance

(HMF) Assistance to MFIs 147

XX. Residential Real Estate Price Indices (NHB RESIDEX) 147

XX.1 Background 147

XX.2 NHB RESIDEX: Performance 148

XXI. Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) 151

XXI.1 Background 151

XXI.2 Subsequent Developments 151

XXII. 1per cent Interest Subvention Scheme 151

XXIII. Corporate Governance 152

XXIV. Human Resources 153

XXIV.1 Staff Strength & Recruitment and Promotions 153

XXIV.2 Training 154

XXIV.3 Business Review Conference for officers of the Bank 154

XXIV.4 Mentor Scheme 154

XXV. Rajbhasha 154

XXVI. Knowledge Centre 156

XXVII. Awards and Recognitions 156

XXVII.1 SKOCH Award for Financial Inclusion 2011 for role in Rural Housing 156

XXVII.2 ADFIAP Award for Development Finance-led Poverty

Alleviation 2011 for Rural Housing Finance 156

XXVIII. Future Outlook 157

LIST OF ABBREVIATIONS


ACB : Audit Committee of Board CPs : Commercial Papers

ADFIAP : Association of Development CRISIL : Credit Rating and Information

Financing Institutions in Asia Services of India Ltd.

and the PacificCRMC : Credit Risk Management

AGM : Assistant General Manager Committee

AIMA : All India Management CRR : Cash Reserve Ratio

AssociationCSO : C e n t r a l S t a t i s t i c a l

ALCO : Asset & Liability Committee Organization

AML : Anti Money Laundering DARPG : D e p a r t m e n t o f

Administrative Reforms and APUHF : Asia Pacific Union for

Public GrievancesHousing Finance

DR Site : Disaster Recovery SiteASSOCHAM : Associated Chambers of

Commerce and Industry of EC : Executive Committee

IndiaED : Executive Director

BCP : Business Continuity PlanEWS : Economically Weaker Section

BE : Budget EstimateFDI : Foreign Direct Investment

BIRD : Business and Industrial FICCI : F e d e r a t i o n o f I n d i a n

Research DivisionChambers of Commerce and

CAB : College of Agricultural Industry

BankingFTS : File Tracking System

CAGR : C o m p o u n d e d A n n u a l GDP : Gross Domestic Product

Growth RateGJRHFS : G o l d e n J u b i l e e R u r a l

CBFIs : Community Based Financial Housing Finance Scheme

InstitutionsGJRHRS : G o l d e n J u b i l e e R u r a l

CBI : Central Bank of IndiaHousing Refinance Scheme

CEOs : Chief Executive OfficersGoR : Government of Rajasthan

CERSAI : C e n t r a l R e g i s t r y o f HDFC Ltd : H o u s i n g D e v e l o p m e n t

S e c u r i t i z a t i o n A s s e t Finance Corporation Ltd

Reconstruction and Security HFCs : Housing Finance CompaniesInterest of India

HIP : Housing Information PortalCMD : Chairman & Managing Director

HMF : Housing MicrofinanceCoR : Certificate of Registration

HO : Head OfficeCPGRAMS : C e n t r a l i z e d G r i e v a n c e

Redress and Monitoring HUDCO : H o u s i n g a n d U r b a n System

108


Development Corporation Facility

LtdLIG : Low Income Group

HUFs : Hindu Undivided FamiliesMFIs : Micro Finance Institutions

IAS : I n d i a n A d m i n i s t r a t i v e MHUPA : Ministry of Housing & Urban

ServicesPoverty Alleviation

IBA : Indian Bank's AssociationMIG : Middle Income Group

ICAI : Ins t i tu te o f Char tered MIK : M o n g o l i a n M o r t g a g e

Accountants of IndiaCorporation

ICWAI : Institute of Cost and Works MoU : M e m o r a n d u m o f

Accountants of IndiaUnderstanding

IDA : International Development MPLS : M u l t i P r o t o c o l L a b e l

AssociationSwitching

IFC : I n t e r n a t i o n a l F i n a n c e MRO : Mumbai Regional Office

CorporationMTs : Management Trainees

IIM : I n d i a n I n s t i t u t e o f N-E Region : North-East RegionManagement

NGO : N o n G o v e r n m e n t a l IIP : I n d e x o f I n d u s t r i a l OrganizationProduction

NHB : National Housing BankIIT : I n d i a n I n s t i t u t e o f

Technology NHB-AWE : NHB-Award Winning Essays

IMF : International Monetary Fund NIBM : National Institute of Bank

ManagementISDN : Integrated Services Digital

Network NOF : Net Owned Fund

ISHUP : Interest Subsidy Scheme for NPV : Net Present ValueHousing the Urban Poor

PLIs : Primary Lending InstitutionsISP : Information Security Policy

PPP : Public Private PartnershipIT : Information Technology

PSBs : Public Sector BanksKDCMPUL : Kaira District Co-operative

RAY : Rajiv Awas YojanaMilk Producers ' Union

RBI : Reserve Bank of IndiaLimited

RC : Remuneration Committee of KfW : K r e d i t a n s t a l t f ü r

DirectorsWiederaufbau, German

Development Bank RHF : Rural Housing Fund

KYC : Know Your Customer RM : Regional Manager

LAF : L i q u i d i t y A d j u s t m e n t RMAC : Risk Management Advisory

109


Committee SLBC : S t a t e L e v e l B a n k e r s '

CommitteeRMBS : Residential Mortgage Backed

Securitization SLCC : State Level Coordination

CommitteeRML : Reverse Mortgage Loan

UN : United NationsRMLeA : Reverse Mortgage Loan

enabled Annuity UNESCAP : United NationsEconomic and

Social Commission for Asia RO : Regional Office

and the PacificRRBs : Regional Rural Banks

UT : Union TerritoryRROs : Regional Representative

VCS : Video Conferencing SolutionOffices

WAN : Wide Area NetworkSAHF : South Asia Housing Finance

Forum WEO : World Economic Outlook

SARFAESIAct : S e c u r i t i z a t i o n a n d WHD : World Habitat Day

Reconstruction of Financial WPI : Wholesale Price Index

Assets and Enforcement of ZCB : Zero Coupon BondSecurity Interest Act

SBI : State Bank of India

SCBs : Scheduled Commerc ia l

Banks

SEBI : Securities and Exchange

Board of India

110

LIST OF TABLES

Table I : Refinance Disbursements

Table II : Refinance Disbursements to Rural HousingTable III : Refinance Disbursements for Low & Moderate Size Loan

Table V : Golden Jubilee Rural Housing Finance Scheme: Performance during 2009-10 & 2010-11Table VI : Golden Jubilee Rural Housing Finance Scheme: Cumulative PerformanceTable VII : NHB Residex-Percentage (per cent) change in different cities: City-wise growth rate over the

previous quarterTable VIII : NHB Residex: City-wise Housing Price Index (Base Year: 2007 = 100)

Table IV : Project Finance Disbursements

LIST OF BOX ITEMS

Box I : Mortgage Risk Guarantee Fund Trust for Low Income Housing

Box II : Central Registry of Securitization Asset Reconstruction and Security Interest of India

(CERSAI)

Box III : Key Findings of the Study on NHB's Housing Micro Finance Programme (2007-2010)

Box IV : Genesis and Launch of the Asia Pacific Union for Housing Finance

Box V : Key Highlights of the Trend Analysis of Housing Finance Portfolio of SCBs 2005-09.

Growth in Housing Finance

Box VI : Key Findings of the Study on Rural Housing Fund (RHF)

Box VII : Need, Scope and Coverage of NHB RESIDEX

LIST OF CHARTS

Chart I : GDP Growth and Trend of Domestic Economy 2010-11

Chart II : Net Incremental Borrowing of NHB during 2010-11

Chart III : Borrowing Outstanding of NHB as on June 30, 2011

Chart IV : Refinance Disbursements

Chart V : Trend of Refinance Disbursements 1999-2011

Chart VI : NHB Residex: City-wise Housing Price Index


111

Owning a House, Dream of Millions of People

Housing - a basic human need and a dream of millions of people of India.

Housing Finance – Makes home ownership possible for a vast majority of the

people resulting in expansion of the Housing market.

Housing Sector - a key contributor to the country's economy on account of its

backward and forward linkages.

National Housing Bank – Striving to develop a sound and sustainable housing

finance system in India, with the Bank's Corporate Vision of promoting inclusive

expansion with stability in the housing finance market and creation of a

supportive market infrastructure through a range of financing and promotional

measures.

112

National Housing Bank - Committed to the Cause of Affordable Housing for All

The year 2010-11 marked a milestone for NHB, which crossed 12,000 crore loan disbursements

during a financial year. Of this, approximately 50 per cent went towards rural housing. Also

approximately 35 per cent of the refinance portfolio was for loans upto ̀ 5 lakhs.

In its journey of 23 years, the National Housing Bank has led and catalyzed the growth of the

housing finance market in the country. The housing finance sector has evolved through various

stages, with NHB as the anchor institution.

'Affordable Housing for All' remains the corporate goal of the Bank. Expansion with stability

has been the underlying theme of NHB's programs and strategies. Bank, through its multi

functional role, is engaged in building the market infrastructure for the sector's efficient

functioning.

The housing finance system has evolved and steadily grown through various stages, with NHB

as the key policy institution at the centrestage. Today, over 50 HFCs have a mortgage loan

portfolio of over `1100 billion. The housing industry and a responsive housing credit system

can potentially play an important role in stimulating the local and the national economies and

in the distribution of economic resources. "Scaling up" and “Affordability” are key challenges

in the Sector and market-based solution will be most sustainable. NHB recognizes the strong

synergies in the role of different players and stakeholders in the sector, and seeks to promote

effective partnership through market infrastructure initiatives.

With the primary housing finance market growing over a period of time, there has been steady

expansion of credit flow into the sector. However, there still exists a gap in fulfilling the

housing needs of the lower and moderate income households. Housing shortage in the lower

income segments is acute. A dedicated and sustainable approach is required to serve this

market segment.

Through its various promotional and financing initiatives, NHB is pursuing its Vision:

'Promoting inclusive expansion with stability in the housing finance market' and its Mission:

'To harness and promote the market potentials to serve the housing needs of all segments of the

population with the focus on low and moderate income housing'.

NHB will seek to actualize its Vision through its focus on four broad areas of activities viz. (i) Financing,

(ii) Development of Market Infrastructure (iii) Expanding the scope of low and moderate income housing,

`

The Bank has adopted its Vision

And Mission

“Promoting inclusive expansion with stability in the housing finance

market.”

“To harness and promote the market potentials to serve the housing needs

of all segments of the population with focus on low and moderate

113

and (iv) Supervision of housing finance companies and the housing finance system. As envisaged in

the NHB Act, the Bank shall “act on business principles with due regard to public interest.”

While the Bank maintains a judicious balance of its various functions, the issue of “Affordable

Housing for All” is a challenge in respect of credit flow and pricing. Issues pertaining to land,

legislation, urbanization, finance, risk assessment and mitigation tools etc are some of the key issues

in the development and promotion of Affordable Housing market.

Role of market infrastructure and new mechanisms that can support the cause of home ownership

particularly for the low and moderate income segments, are clearly recognized. Penetration in these

market segments is still low and the right business model will include efficient financing, risk

mitigation, credit enhancement and specialist approach that can result in more innovative products.

Identifying the demand in this market, meeting their credit requirements on acceptable terms, and

catalyzing the supply of housing construction at affordable prices are some of the key challenges.

Though demands are huge, and the market is potentially large, individual transactions tend to be

small and geographically scattered, which can escalate costs.

The housing finance sector has enormous developmental impact in terms of social stability and

economic empowerment at the individual level and larger economic development at the sector level.

114

National Housing Bank was set up under an Act of Parliament in 1988, as the apex development

housing finance institution. In its journey of more than 23 years, NHB has worked to build up the

capacity in the sector to address the housing needs for all segments of the population, with NHB's

focus on low and moderate income households.

The Bank has been promoting inclusive expansion and stability in housing finance market. The

proactive policy support of NHB has expanded the reach and depth of Housing Finance Industry.

To supplement its regulatory role, NHB is also expanding its client base to reach all regions of the

country and serve all segments of the population. Recent initiatives of NHB, including CERSAI

(Central Registry supported by the Government of India) and NHB RESIDEX are steps towards

sustainable market infrastructure growth that will add to the transparency and robustness of the

market.

As its promotional charter, NHB is also supporting the cause of senior citizens through the Reverse

Mortgage Loan enabled Annuity (RMLeA) product.

NHB is hosting the Secretariat of Asia Pacific Union for Housing Finance (APUHF), a platform for

affordable housing in the Asia Pacific region.


I.1 An aggregate amount of 12,034.79 crore I.6 As a measure to address the housing needs has been disbursed by the Bank, of which of the informal sector, the Bank continued `11,722.79 crore was disbursed under to engage with Microfinance Institutions. Refinance Schemes of NHB. An amount of The Bank, so far, has sanctioned loans to 29 `312 crore was extended through Project microfinance institutions in 11 States Finance operations of the Bank. This is an resulting in construction/repair and all-time high disbursements made by the renovation of 24,255 housing units located Bank during any financial year. in both urban and rural areas across the

I.2 Approximately 35 per cent of total refinance country. disbursed during the year 2010-2011 I.7 As on June 30, 2011, the total number of comprised of loan size of below ̀ 5 lakh. HFCs registered with NHB stood at 52 of

I.3 With growing thrust of the Bank on rural which 33 companies have been granted housing, the Bank disbursed an amount of Certificate of Registration (CoR) without `5,785.58 crore under rural housing out of permission to accept public deposits. the total refinance disbursements of During the year, CoR was granted to 5 new `11,722.79 crore during the year. The share Housing Finance Companies (HFCs) and of rural housing in total refinance cancelled in respect of one HFC. Three disbursements of the Bank has increased HFCs have surrendered the CoR on account from 46 per cent in 2009-10 to 49 per cent in of their inability to undertake further 2010-11. housing finance business.

I.4 The total borrowings outstanding of the I.8 As an important step to bring in greater thBank as on 30 June 2011 was 21,776 crore. commitment to the housing finance

The main sources of borrowings were Rural business, the Bank has increased the Housing Fund, Debenture/Bonds and requirement of minimum NOF of HFC “SUNIDHI” & “SUVRIDDHI” term deposit from the earlier 2 crore to 10 crore to be schemes. eligible to commence or carry on the

I.5 Under the Rural Housing Fund, an business of HFI on or after June 18, 2011.allocation of 2,000 crore was made for the I.9 The Bank in collaboration with the KfW, year 2010-11.The Bank received the entire Germany has launched a Promotional amount which was duly disbursed during Programme for Energy Efficient New the year 2010-11 towards refinance for rural Residential Housing in India in December housing for the target groups. Under the 2010. The Programme seeks to promote the Rural Housing Fund, the main beneficiary

concept of energy efficiency in residential groups were the women folk which has also

houses. .c o n t r i b u t e d t o w a r d s w o m e n

I.10 NHB conducted the first ever exclusive empowerment and social upliftment.training programme for the women personnel working in the housing finance sector on “Mortgage Finance for Homes” in October 2010 at Bengaluru, which drew appreciation from all stakeholders. More than 30 women personnel representing Banks and HFCs participated in the Programme.

I.11 NHB continued its role as the Central Nodal agency for implementation of the Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) and 1per cent Interest Subsidy Scheme for housing loans of the Central Government. The 1per cent Interest Subsidy Scheme for housing loans, has been extended till March 31st, 2012 and for the

`

`

` `

`

Performance Highlights

in `crore

Year ended 30th

June 2008 2009

2010 2011

Sanctions

Disbursements

Net Owned Funds

Gross NPAs

Net NPAs

Profit After Tax

(PAT)

PAT per

Employee

CRAR (%)

13362

9036

1999

Nil

Nil

170

2.13

24

12715

8160

2485

Nil

Nil

280

3.15

20

14293

12035

2770

Nil

Nil

279

3.21

21

15729

10889

Nil

Nil

236

2.62

18

2230

1. Highlights: 2010-11

115


financial year 2011-12, interest subvention housing finance. The portal was planned to of 1per cent has been extended to include be implemented in three phases with the housing loans upto 15 lakh, provided the first phase focussing on individual cost of house does not exceed 25 lakh. buyer/seller/renter of property, the

second phase on Investors & Business I.12 NHB continued its endeavours to promote Partners and the third phase on Policy the Reverse Mortgage Loan Scheme viz. Makers & Professionals. All the three RML and RMLeA - by way of Counseling phases have been completed. The contents Programs and Seminars to generate are now being reviewed/updated awareness among senior citizens about the periodically as per the review schedule scheme. During 2010-11, NHB organized during maintenance phase. The portal can and conducted 16 Seminars and opened be accessed at www.housingindia.info.three Counseling Centres for senior citizens

in various cities of India. Till June 30, 2011, a I.16 The Interest Subsidy Scheme for Housing total of ten Counselling Centres have been the Urban Poor (ISHUP) was launched by established by NHB in nine different cities the Ministry of Housing and Urban Poverty of the country. Alleviation, Government of India for

addressing the housing needs of EWS and I.13 NHB RESIDEX – the residential property LIG segments of urban areas. Till June 30, price Index launched by NHB in the year 2011 NHB as a Central Nodal Agency has 2007 for tracking prices of residential signed Memorandum of Understanding properties in different parts of the country, with 33 primary lending institutions (PLIs) is presently being updated on a quarterly consisting of 20 Public Sector Banks, 2 basis with its base year as 2007 for 15 cities Private Sector Banks, 5 Regional Rural of the country. During the year 2010-11, the Banks and 6 Housing Finance Companies Index was released for the quarters ended and received 190 interest subsidy claims June 2010, September 2010, December 2010 from PLIs claiming 5.11 crore as Net and March 2011.Present Value (NPV) of interest subsidy

I.14 The scope of the regional network SAHF covering 6201 beneficiaries.(South Asia Housing Finance Union) was

I.17 In the Union Budget announcement for the expanded to the Asia and Pacific region and year 2011-12, the allocation under Rural the network was renamed as Asia Pacific Housing Fund has been increased from Union for Housing Finance (APUHF). NHB earlier ` 2000 crore in 2010-11 to ` 3000 played a key role, in association with other crore for the year 2011-12. Further, the limit institutions/countries in the Asia Pacific of housing loans for lending under priority region, in developing the Union as a sector has also been enhanced from 20 lakh platform to act as a knowledge sharing and to 25 lakh. networking medium and promote coalition

and coordination among the Asia Pacific I.18 The Budget 2011-12 has proposed to create countries to facilitate exchange of ideas a Mortgage Risk Guarantee Fund under and promote cross-learning among the Rajiv Awas Yojana to enable provision of countries . NHB hosts the Secretariat for the credit to Economically Weaker Sections APUHF . The first meeting of the Advisory (EWS) and LIG households. NHB is Board of the Union was held in November expected to play a vital role in managing 2010 and a Workshop on Housing Finance and administering the proposed Fund.was organised during June 26-29, 2011 at I.19 The Government had facilitated setting up Ulaanbator, Mongolia by APUHF in of Central Electronic Registry under the association with Mongolian Mortgage SARFAESI Act, 2002. This Registry has Corporation (MIK), KfW and Frankfurt become operational since March 31, 2011.School of Finance & Management.

I.20 Recognising the growing importance of I.15 The Housing Information Portal (HIP) was Public Private Partnership in the present

launched in the year 2008-09 to serve as a economic scenario, the Bank has entered reliable, single point source with updated into a partnership with International and complete information on housing and

``

`

``

116


117

F i n a n c e C o r p o r a t i o n ( I F C ) a n d strong signs of recovery in the worst Government of Rajasthan (GoR) to promote affected economies. However, despite low and moderate income housing in the strong recovery, the global economy State of Ra jasthan through jo int continues to be affected by uncertainties in participation of the public and the private the financial and the real sectors. The fears sectors in promoting an HFC catering to of a global recession somewhat receded this segment of the market. during the end of the year 2009 and the first

half of 2010. Resultantly, there was a spurt I.21 Under Golden Jubilee Rural Housing in industrial production and trade which Finance Scheme (GJRHFS), a total of continued through the first half of the year 2,93,721 units were financed by HFCs and 2010 and spurred consumption growth. PSBs under the Scheme as against a target of The sustained growth in economic 3,75,000 units thus accounting for 78 per activities through the year had somewhat cent achievement. Till March 2011, a total of neutralized the fears of a double-dip global 31,52,967 dwelling units has been financed recession.by the HFCs, Banks and Co-operative

sector institutions as against a target of II.1.2 Such recovery has been marked by 33,55,000 dwelling units (approximately 94 geographical disparities. The economic per cent of the target) during the period growth has been relatively modest in the from 1997 to 2011. advanced economies owing to the severity

of the impact of the financial crisis on such I.22 NHB was conferred the SKOCH Financial economies. On the other hand, the Inclusion Award 2011 for its intervention in emerging and developing economies have rural housing through the two dedicated shown visible growth trends and low Schemes viz. Golden Jubilee Rural Housing unemployment rates. However, these Finance Scheme and the Rural Housing economies have witnessed the gradual Fund, which have demonstrated the withdrawal of fiscal stimulus along with viability and sustainability of rural housing monetary tightening to curb inflationary finance in the country.pressures mainly relating to supply-side

I.23 The Association of Development Financing bottlenecks in respect of food and fuel. Institutions in Asia and the Pacific

II.1.3 Amongst the advanced economies, those in (ADFIAP) conferred on NHB the ADFIAP Asia have witnessed a stronger recovery in Award for Development Finance-led comparison to their counterparts in the Poverty Alleviation for the year 2011.Euro Zone area and North America. With

The market mechanism to ensure supply of respect to the advanced and developing affordable housing and housing finance as economies, those in Asia are at the forefront compared to demand is still far from fully followed by their counterparts in Africa developed. The rising population and rapid and East Europe. Despite the rebound in urbanisation are further putting an immense growth trends, the global economic pressure on the housing stock in the urban areas conditions continue to remain volatile of the country. Presently, about 30 per cent (328 owing to continued uncertainty about the million) of Indian population are living in urban resolution of the debt crisis in the Euro Zone centres and the estimated number is expected to area. further rise to about 40 per cent by 2025. This

II.2 Financial Market Recoveryrequires a concerted and proactive approach on the part of all the stakeholders. II.2.1 Echoing positive economic sentiments,

global financial markets have exhibited encouraging signs of recovery. While credit

II.1 Strong Recovery amidst Economic growth has been somewhat sluggish in the Uncertainties advanced economies, it has exhibited

buoyant trends in the emerging and II.1.1 A fallout of the global economic meltdown developing economies particularly those in which started in early 2008 was Asia and Latin America. Bank lending has transformation in the global economic eased in most parts of the world including infrastructure. Remedial actions resulted in

II. Global Economy: 2010-11


118

the developed economies after a prolonged per the January World Economic Outlook period of tightened lending conditions. (WEO) Update released by the IMF, global

growth is expected to reach 4.5 per cent II.2.2 Though global capital flows have recovered during 2011-12. Real GDP is expected to sharply from the lows they fell into expand by about 2.5 per cent in the immediately following the crisis, they are advanced economies and by 6.5 per cent in way below the levels reached during the the emerging and developing economies. pre-crisis period. Prospects of robust

growth and higher yields relative to II.3.2 Industry indicators are pointing towards a developed economies have attracted growth in industrial productivity. capital flows from the developed Industrial growth is being propelled by economies into the emerging markets. On easing financing conditions, robust the other hand, capital flow between the corporate performance and improving developed economies has suffered owing demand. It is expected that developing to sluggish economic outlook. The recovery economies in Asia, Latin America, Eastern has been mainly spearheaded by portfolio Europe and parts of Africa would continue flows with the share of Foreign Direct to grow at healthy rates resulting from Investment (FDI) witnessing a falling trend accommodative monetary policies, rising in recent times. exports and consumption patterns and

II.2.3 In the present scenario, sustained capital sustained capital inflows. However, it is flows from advanced economies towards expected that inflationary pressures will the emerging markets may well continue in continue to remain a major cause of concern the immediate future. This is mainly due to during the forthcoming year. Inflationary the resilience exhibited by the emerging pressures would mainly result from a spurt economies in the face of g lobal in food and energy prices, especially in the uncertainties immediately following the developing and emerging economies. financial crisis. However, geopolitical Financial markets in advanced economies uncertainties and volatilities with respect to can expect limited tightening of monetary inflationary pressures and the prospect of

policies in the forthcoming year. On the policy rate hikes to counter such pressures

other hand, there may be a comparatively may result in deceleration of capital inflows

higher degree of monetary tightening in the towards these economies.

developing economies in order to tame II.2.4 The year 2010-11 also witnessed resurgence growing inflationary pressures.

in commodity prices, mainly on account of robust growth in demand for commodities during the second half of the year 2010. III.1 The Indian economy is firmly placed on the Growth in demand for commodities was path of recovery. As per the Advance spurred by rapid growth experienced in the Estimates for National Income for 2010-11 emerging market economies. This led to a (at constant 2004-05 prices) released by the spurt in oil prices during the first half of the Central Statistical Organization (CSO), the year 2011. The rise in food prices was growth in Gross Domestic Product (GDP) at mainly related to supply-side shocks

factor cost is estimated at 8.6 per cent caused by weather conditions. These in

during 2010-11, with agriculture and allied turn, would adversely affect access to food

activities growing at 5.4 per cent, industry amidst volatility in food prices.

at 8.1 per cent and the services sector at 9.6 II.3 Recovery expected to Strengthen per cent. Corresponding growth in GDP

during 2009-10 was 8.0 per cent, with II.3.1 Keeping in mind the improving conditions agriculture and allied sector, industry and in global financial markets, buoyant growth

experienced in emerging and developing services growing at 0.4, 8.0 and 10.1 per cent economies and growing confidence in the respectively. The trend in growth of GDP advanced economies, the economic during the period 1970-71 and 2010-11 has prospects for 2011-12 look promising. As been captured in Chart 1.

III. Domestic Economy: 2010-11


119

12.0

10.0

8.0

6.0

4.0

2.0

0.0

-2.0

-4.0

-6.0

GDP growth GDP growth trend

Pe

rce

nt

a: Total GDP1970-7

1

1971-7

2

1974-7

5

1976-7

7

1978-7

9

1980-8

1

1982-8

3

1984-8

5

1986-8

7

1988-8

9

1998-9

9

2000-0

1

2004-0

5

2006-0

7

2008-0

9

2010-1

1

1990-9

1

1992-9

3

1994-9

6

1996-9

7

2002-0

3

Source: Macro-Economic & Monetary Developments, RBI, 2010-11

Chart I: GDP Growth and Trend of Domestic Economy 2010-11 Price Index (WPI) on a year-on-year basis, was recorded at 8.2 per cent in January, 2011 as against 8.5 per cent in January, 2010. The average WPI inflation rate during the twelve month period (February, 2010 to January, 2011) was 9.4 per cent as compared to 2.4 per cent during the corresponding period during 2009-10.

III.5 If the WPI inflation of 8.2 per cent recorded during January, 2010 is segregated into food and non-food items, then food inflation stood at 9.30 per cent in January, 2011 as compared to 19.80 per cent in January, 2010. Correspondingly, non-food

III.2 As per the Index of Industrial Production inflation stood at 7.81 per cent in January, (IIP), the industrial sector grew at 8.6 per 2011 when compared to 4.65 per cent in cent during 2010-11 (April – December) January, 2010. The recent spurt in inflation, when compared to the previous year. Out particularly during the end of year 2010 is of the three broad industrial sectors, the mainly attributable to supply-side manufacturing sector which grew at 9.1 per bottlenecks driven by soaring prices of cent during 2010-11 (April – December) has fruits, vegetables, milk, poultry, fish etc. been the key driver of industrial growth. The inflationary pressures persist mainly Among other industry groups, the capital due to sustained domestic demand and goods sector recorded an increase in spurt in commodity prices in the global growth during 2010-11 (April – December) markets. at 16.7 per cent when compared to the

III .6 The Government had adopted an corresponding growth of 11.2 per cent accommodative monetary policy since achieved during 2009-10 (April – September 2008 with the intention of December). As far as the consumer mitigating the adverse effects of the global durables and non-durables sectors are financial crisis on the Indian economy. concerned, the growth rates have declined However, it was forced to make an exit to 21.7 per cent and 0.7 per cent during 2010-from the same for countering accentuated 11 as compared to 22.7 per cent and 1.4 per in f la t ionary pressures that were cent respectively during 2009-10 (April – threatening the economy. The Reserve December), thereby indicating a year over Bank of India had to perform the difficult year decline.task of ensuring sufficient liquidity for

III.3 With respect to the infrastructure sector, the smooth functioning of the markets on the index for six core industries (crude oil, one hand while continuing with its anti-petroleum refinery products, coal, inflationary monetary policy stance on the electricity, cement and finished carbon other. The RBI had increased the Cash steel, which have a combined weight of Reserve Ratio (CRR) by 100 basis points, 26.68 per cent in the IIP) grew at 5.6 per cent Reverse Repo Ratio by 250 basis points and during 2010-11 (April – January) as the Repo Rate by 200 basis points since compared to a growth rate of 5.5 per cent February, 2010. With the tightening of achieved during the corresponding period liquidity conditions, the RBI started of 2009-10. injecting liquidity through repo under the

LAF beginning end May, 2010.III.4 A major cause of concern during the year was a spurt in inflationary pressures mainly III.7 Credit growth, though somewhat resulting from supply-side bottlenecks. moderated, remained above the projected Inflation, as measured by the Wholesale levels. In response to higher interest rates


120

resulting from frequent policy rate hikes by Interest Subvention on Housing Loans upto RBI during the year, non-food credit 10 lakh where cost of housing unit do not growth decelerated and deposit growth exceed 20 lakh has been further extended accelerated. Net capital flows at US$ 36.7 for the FY 2011-12. The amount of loan billion during April-September, 2010 were eligible under the Scheme has also been higher when compared with US$ 23.0 increased upto 15 lakh (from the earlier 10 billion during April-September, 2009. lakh) for housing unit whose cost does not

exceed 25 lakh (from the earlier 20 lakh). III.8 However, net FDI into India moderated to US$ 5.3 billion during April-September The proposal is expected to improve affordability 2010 as against the US$ 12.3 billion received levels and generate increased demand for during April-September 2009. However, housing loans particularly from LIG and MIG portfolio investment witnessed an increase segments. The proposal will encourage the State during the first half of the year 2010-11 with and/or Private sector agencies to undertake net inflows to the tune of US$ 23.8 billion as construction of houses/flats within the cost against US$ 17.9 billion received during the range of upto 25 lakh, which will cater to the same period of the year 2009-10. The surge needs of a vast segment of the population. in portfolio flows could be attributed to

IV.2 Enhancement of Housing Loan Limit sound economic fundamentals and rising

under Priority Sector Lending: The international liquidity.

existing housing loan limit under Priority III.9 During 2010-11, India's foreign exchange Sector Lending by banks has been

reserves continued to exhibit an increasing enhanced from 20 lakh to 25 lakh.trend. The country's foreign exchange

This proposal will encourage lending by Banks reserves increased to US$ 299.2 billion at

to the Housing Sector to meet their overall target end January 2011 from the level of US$

of 40per cent lending to priority sector. As a 279.1 billion at end March, 2010.

result, banks lending in this segment will III.10 As far as social sector development is witness significant increase in the coming years

concerned , the share o f Centra l due to increased demand for housing loans in Government expenditure on social services this segment. including rural development in total

IV.3 Provision under Rural Housing Fund expenditure (Plan and non- Plan) has

Enhanced: The provision under Rural increased from 13.75 per cent in 2005-06 to

Housing Fund has been increased to 3000 19.27 per cent in 2010-11 (BE). Similarly, the

crore from the existing 2000 crore.expenditure on social services by the

This proposal will encourage the provision of Government (Centre and States combined) Housing Finance to target groups in rural areas, has also shown increase in recent years a step towards mitigating the housing shortage reflecting higher priority to social services. in rural areas. The expenditure on social services as a

proportion of total expenditure has IV.4 Proposal to Create Mortgage Risk increased from 21.1 per cent in 2005-06 to Guarantee Fund under Rajiv Awas 23.8 per cent in 2008-09 and further to 25.2 Yojana: The Budget 2011-12 has proposed per cent in 2010-11 (BE). to create a Mortgage Risk Guarantee Fund

under Rajiv Awas Yojana to enable provision of credit to Economically Weaker

The Hon'ble Finance Minister in his Union Sections (EWS) and LIG households.

Budget for the year 2011-12 had announced This proposal will encourage lending by banks the following measures with respect to the and housing finance institutions to EWS and housing and housing finance sector.LIG households as the proposed Guarantee Fund

IV.1 Scheme of Interest Subvention of 1 per will enhance the credit worthiness of EWS/LIG

cent on Housing Loans Liberalised segments by providing guarantee cover to the

Further: The existing Scheme of 1per cent

IV. Union Budget 2011-12

``

` `

` `

`

` `

``


121

housing loans taken by these people . The Box IIproposal will result in strengthening the

Central Registry of Securitization Asset housing finance market for the lower segment

Reconstruction and Security Interest of households and would result significantly in

India (CERSAI)mitigating their housing problems with

The Central Registry of Securitization Asset increased credit flow and its availability. The Reconstruction and Security Interest of lending institutions will cover their risk of India (CERSAI), a Government Company default and enjoy capital relief on the loans licensed under Section 25 of the Companies covered by the Risk Guarantee Fund.Act, 1956 has been incorporated for the

Box I purpose of operating and maintaining the Central Registry under the provisions of the Mortgage Risk Guarantee Fund Trust for Securitization and Reconstruction of Low Income HousingFinancial Assets and Enforcement of

The Hon'ble Union Finance Minister in his Security Interest Act, 2002 (SARFAESI Act).Budget speech for the FY 2011-12 has

The objective of setting up the Central proposed to create a Mortgage Risk Registry is to prevent frauds in loan cases Guarantee Fund under Rajiv Awas Yojana involving multiple lending from different (RAY) to enable provision of housing loans banks on the same immovable property. to Economically Weaker Sections (EWS) This Registry has become operational on and LIG households.March 31, 2011. All transactions involving

The major objective of this Trust will be to creation of equitable mortgage by deposit provide default guarantee for housing of title deeds, asset reconstruction and loans upto 5 lakh sanctioned and creation of security interest made on or after disbursed by the lending institutions March 31, 2011 needs to be registered with without any collateral security and/or CERSAI. Information furnished to CERSAI third party guarantees to the new or include particulars of the property, nature existing borrowers in the EWS/LIG of encumbrance, institution with which categories. property is mortgaged etc . Each

registration made is assigned with one The Government of India, Ministry of unique asset identification number. Housing & Urban Poverty Alleviation

Total number of institutions registered with (MoHUPA) will set up the Trust under the CERSAI as on 30th June 2011 is 151 and the Mortgage Risk Guarantee Scheme. number of users created is 31388. Total National Housing Bank is expected to number of registration of mortgage by manage and administer the proposed deposit of title deeds done by Banks/ HFCs Fund Trust including providing the and other financial institutions as on 30th infrastructure support & the required staff.June 2011 is 100021.

IV.5 Setting up of Central Electronic Registry: IV.6 Enhancement in the Export Duty for Iron The Government had facilitated setting up

Ore, Reduction in the Customs Duty on of Central Electronic Registry under the

Raw Materials of Cement Industry: The SARFAESI Act, 2002. This Registry has

rate of export duty for all types of iron ore become operational since March 31, 2011. has been enhanced and unified at 20per

cent ad valorem. Similarly, the basic Such a Registry will help in creation of a customs duty on two critical raw materials centralized data base of all immovable properties of Cement industry viz. petcoke and and will enable prevention of frauds in housing gypsum is also proposed to be reduced to loan cases involving multiple lending from 2.5 per cent.banks/HFIs on the same immovable property.

This will constitute as an important step in As iron ore is natural resource, enhancement in the export duty will discourage its export and developing the market infrastructure.help in conservation of it. Iron and Steel is one

`


122

of the essential raw materials used in the IV.10 Issue of Tax Free Bonds by Housing and construction of Housing. The proposal will Urban Development Corporation result in reduction in prices of iron and steel as ( H U D C O ) : H o u s i n g a n d U r b a n also improvement in its supply in the domestic Development Corporation (HUDCO) has market. Similarly, the proposed reduction in been allowed to issue tax free bonds of customs duty on two critical raw materials of 5000 crore for the development of housing Cement industry viz. petcoke and gypsum will sector.encourage increased supply of Cement in

This will provide boost to infrastructure domestic market at more competitive rates.

development in housing.The overall impact of enhancement in export duty on iron ore and reduction in custom duty on petcoke and gypsum will be reduction in the cost of construction of housing. V.1 An Overview of the Market Position

IV.7 Proposal to Provide Investment Linked V.1.1 During the year 2010-11, growth Deduction to Businesses Which Develop momentum remained strong in all the three Affordable Housing under A Notified major sectors of the economy viz. Scheme industrial, agriculture and service sector,

despite the volatil it ies. However, This proposal will encourage private players to persistence of high food inflation remained venture into developing low cost housing and a cause of concern. In addit ion, thus help in increasing supply of low cost international crude oil prices also recovered housing units.sharply on the back of strong global

IV.8 Enhancement of the Exemption Limit for recovery further fuelling the inflation. the General Category of Individual

V.1.2 The Reserve Bank of India (RBI) shifted its Taxpayers: The exemption limit for the monetary policy stance from managing

general category of individual taxpayers recovery to managing inflation during the

has been increased from 1,60,000 to course of the year as inflation emerged as a

1,80,000 from FY 2011-12. This measure major concern for the Indian economy. RBI,

will result in a uniform tax relief of 2,000 to in its effort to contain inflation, hiked repo

every taxpayer.rate 8 times during the year from 5.25per cent to 7.50per cent. Similarly, reverse-repo This proposal will increase the loan repaying has also been increased from 3.75per cent to capacity of the individual home loan borrowers 6.50per cent during the same period. which may result in the increase in demand for Further regulated savings bank deposit housing loan.interest rate was also increased from

IV.9 Continuation of Income Tax Benefits 3.50per cent to 4per cent.under Sections 24, 88 And 36(1)(viii) of the

V.1.3 Liquidity in the system has remained tight Income Tax Act: The Budget 2011-12 has throughout the year with banks regularly retained the benefits of tax exemptions borrowing under LAF window from RBI. under aforesaid Sections of the I. T. Act, viz. All these developments have made credit repayment of principal amount of loan upto significantly costly as compared to 1 lakh, interest upto 1.50 lakh and previous year. Further transition to Base creation of Special Reserve under Section Rate regime by the banks on the instruction

36(1)(viii).of RBI has also impacted the cost of short

Retention of the aforesaid incentives will term credit as banks are not permitted to continue to generate new demand for housing lend below base rate. loans as also supply of credit, with downward

V.1.4 Going forward, inflation path remains bias in rates. sticky and risks are on the upside. Headline

`

``

`

` `

Financial Performance of the Bank during 2010-11

V. Resource Mobilization


123

inflation could remain elevated in the first half of 2011-12 before declining gradually in the second half, but could remain above the Reserve Bank's comfort level. Pass-through of global commodity prices, especially oil, has been as yet incomplete and constitutes a significant medium-term risk.

V.2 Resources mobilised during the year

V.2.1 NHB raised both short term and long term resources during the year. Short term resources included issuance of Commercial Papers (CPs) and Short Term Loans from banks. Long Term borrowings included

payment of financial obligation on the issuance of Zero-coupon Bonds (ZCB),

instruments. Coupon Bonds, Term Loans from banks, Deposits from banks under Rural Housing The total borrowing outstanding as on 30th Fund (RHF), Deposits from Housing June 2011 is 21,776 crore.Finance Companies (HFCs) and Deposits V.3 Sources of Funding from public under “SUNIDHI” and

V.3.1 Rural Housing Fund (RHF) : While “SUVRIDDHI” term deposit schemes. The presenting the Union Budget for the year gross incremental borrowing during the 2008-09, the Hon'ble Finance Minister, year was 35,503 crore. After repayments announced creation of a fund to enhance

during the year, the net incremental NHB's refinance operations in the rural

borrowing during 2010-11 was 10,182 housing sector by tapping the resources of crore. Scheduled Commercial Banks to the extent

of shortfall in their priority sector lending. The allocation for the year 2008-09 was 2000 crore. In the year 2009-10 and 2010-11

a further sum of 2000 crore each was allocated by the banks to the Fund.

V.3.2 Bonds and Debentures: Bonds and Debentures have been one of the main components of resource raising during the year 2010-11. Bonds and Debentures for a face value of 4025 crore were issued during the year including a Zero Coupon Bond for face value of 800 crore. The actual cash inflow on account of such issuance was 3867 crore. While the Coupon / discount on these Bonds and Debentures ranged between 7.00per cent and 9.75per cent, the tenors ranged between

V.2.2 Bonds issued by NHB are rated “AAA” by 12 months and 60 months. at least two of the rating agencies approved V.3.3 “SUNIDHI” & “SUVRIDDHI” term by SEBI viz. CARE ratings, CRISIL, Fitch deposit schemes: NHB launched two new ratings and Brickwork ratings and are listed term deposit schemes viz. “SUNIDHI” &

“SUVRIDDHI” during the year 2008-09. on Bombay Stock Exchange / National “SUNIDHI” term deposit is open for Stock Exchange. Commercial Papers issued individuals/ HUFs/ Partnerships/ by NHB during the year were rated “A1+” Societies & Trusts / Association of Persons.

by ICRA. These ratings indicate highest Minimum tenor is one year and the

degree of certainty regarding timely maximum is five years. “SUVRIDDHI” is

`

`

`

``

`

`

`

4000

3500

3000

2500

2000

1500

1000500

0BONDS &

DEBENTURESLOAN AGAINSTDEPOSIT (LAD)

RURAL HOUSINGFUND

SUNIDHI /SUVRIDDHI

TERM LOANS

3867

280

2015

48

3972

Chart II: Net Incremental Borrowing of NHB during 2010-11

Net incremental Borrowing during 2010-11 ( Rs. Crore)

Chart III: Borrowing Outstanding of NHB as on June 30, 2011

RURAL HOUSING FUND26%

BONDS & DEBENTURES

45%

TERM LOANS23%

EXTERNAL BORROWING 2%

CBLO 2%

LOAN AGAINST DEPOSIT1 %

DEPOSITS- PUBLIC / HFCs1%


124

term deposit scheme open only for for the housing projects. individuals and HUFs and the tenor is five VI.1 Refinance Performance years. “SUVRIDDHI” is notified under

VI.1.1 During the year 2010-11, refinance Section 80C of Income Tax Act, 1961. disbursements touched the highest ever Amount outstanding as on 30.06.2011 under figure of 11,722.79 crore, registering an both the schemes is 223 crore out of which increase of more than 44per cent over the 48 crore was mobilised during the year.disbursements of 8,107.76 crore made in the year 2009-10. Out of the total

NHB extends Financial assistance through disbursements, 5,785.58 crore were refinance as also the project finance disbursed for rural housing under NHB's windows. The refinance assistance two rural housing refinance schemes viz. provided to various Primary Lending the Golden Jubilee Rural Housing Refinance Institutions viz. Banks, Housing Finance Scheme (GJRHRS) and the Rural Housing Companies, Co-operative sector institutions Fund (RHF), together constituting 49.35per is towards their individual housing loans. cent of the total disbursements. The project finance intervention of the Bank VI.1.2 The break-up of the disbursements made to is through the direct finance window to different categories of institutions under Public and Development agencies/ different schemes during 2010-11 is as M u n i c i p a l C o r p o r a t i o n s / W e l f a r e under:Association / Micro Finance Institutions etc

```

`

`

VI. Deployment of Funds

InstitutionCategory Scheme

Regular RHF GJRHRS Total

HFCs 1139.21 1687.54 481.92 3308.67Scheduled Banks incl. RRBs 4798.00 316.12 3300.00 8414.12

Total 5937.21 2003.66 3781.92 11722.79

Table I: Refinance Disbursements( ` Crore)

The graphical representation of disbursements during 2010-11 is as under:

15000

10000

5000

0

Regular RHF GJRHRS Total

HFCs Scheduled Banks incl. RRBs Total

Trend of refinance disbursed since 1999-2011 is as under:

Chart V: Trend of Refinance Disbursements 1999-2011

Trend of Refinance Disbursements

Dis

bu

rsem

ents

15000100005000

0

1999-00

2000-01

2001-02

2002-03

2003-04

2005-06

2006-07

2007-08

2007-08

2009-10

2010-11

2004-05

Chart IV: Refinance Disbursements

( ` Crore)

Year

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Disb.

842

1008

1025

2710

3253

8062

5632

5500

8587

10854

8108

11723


125

VI.1.3 Performance under Rural Housing to be included, about 84per cent of the refinance disbursements in 2010-11 were Out of the total refinance disbursements of made in respect of housing loans upto 15 11,722.79 crore, 49.35per cent aggregating lakh. 5,785.58 crore were disbursed under the

Rural Housing Fund (RHF) and the Golden VI.2 Project Finance Performance Jubilee Rural Housing Refinance Scheme

VI.2.1 During the year 2010-11, the Bank has (GJRHRS) together in respect of loans given sanctioned Project Finance assistance for 6 by Primary Lending Institutions (PLIs) in

the rural areas. projects amounting to 78.80 crore and disbursed 312.00 crore including The break-up of the disbursements made unutilized sanctions of previous years. This for rural housing is as under:disbursement was one of the highest in

Table II. Refinance Disbursements to Rural Housing Project Finance of the Bank. The disbursements were made to Housing Micro Finance Institutions, Public Agencies and Joint Ventures under Public Private Partnership.

Category wise break up of disbursement is as under:

VI.1.4 Focus on Low & moderate Size Loans

The disbursement of refinance during the year 2010-11 focused on Low and moderate size loans The distribution of refinance disbursements on the basis of individual loan size is as under :

VI.2.2 Cumulatively, till end of the June 2011, the Bank has sanctioned 434 projects having project cost of 5997.45 crore and loan component of 4528.36 crore. So far the Bank has disbursed 2042.67 crore under Project Finance.

Thus, more than 35per cent of the refinance disbursements in 2010-11 were made in respect of housing loans upto 5 lakh. Moreover, if loans upto 15 lakh were also

```

``

``

`

``

Housing Finance Companies

Scheduled Banks incl. RRBs

Size of IndividualLoans against which Refinance Disbursed

Amount( crore)`

Percent of Total

Upto 2 lakh 290.35 2.48

`2 lakh to ̀ 5 lakh 3816.53 32.56

`5 lakh to ̀ 15 lakh 5740.29 48.96

Over ̀ 15 lakh 1875.62 16.00

Total 11722.79 100.00

`

Table III: Refinance Disbursements for Low & Moderate Size Loan

Disbursements Budget Achieved

Public Housing Agencies 500 216 Slum Redevelopment Projects / EWS / LIG / 75 6Housing Micro FinancePPP and others 100 90 Total 675 312

Table IV: Project Finance Disbursements

( ` Crore)

Housing complex under construction -Public Private Partnership

A project of Andhra Pradesh Rajiv Swagruha Corporation Limited– financed by NHB

Institution Category Amount( Crore)`

Housing Finance Companies 2169.46

Scheduled Banks incl. RRBs. 3616.12

Total 5785.58

http://www.inrsymbol.in/



126

VI.2.3 UN-HABITAT Water & Sanitation Rajasthan through joint participation of the Programme: NHB had signed an public and the private sectors. The event a g r e e m e n t o f c o o p e r a t i o n w i t h m a rk e d t he co m i ng together of the

UN-Habitat for collaborating on water supply and sanitation projects for low income households in the year 2008-09. Under the agreement, UN Habitat has Stakeholders, viz. NHB, IFC and GoR to agreed to provide $3,75,000 through NHB sign the MoU in New Delhi on October for the water and sanitation component of 27, 2010. housing micro finance projects, for VI.2.6 Consistent with the charter of the NHB and standalone water and sanitation projects in line with the IFC's growing interest in the and for capacity building and training

Indian market, the Partnership will lead to efforts in this field.

the creation of a State-specific specialised VI.2.4 During the year 2010-11, an amount of Housing Finance Institution to cater to the

$1,27,500 has been received by the Bank in underserved market. The Partnership is the second instalment and in turn NHB has also expected to spur the demand for low disbursed 25.00 lakh to Nanayasurabhi and moderate housing through credit Development Financial Services for support from the lending institutions. The construction of estimated 312 toilets for the growing demand will spur housing supply members of SHGs operating in 3 districts of

through a conducive and supportive State Tamil Nadu and 1.50 crore for

housing Policy. This has the potential of construction of estimated 5000 toilets for

turning into a unique model to address the individual members of the registered

housing shortage among the low income Primary Milk Producers' Co-operative

households.Societies affiliated to Kaira District Co-VII Housing Micro Finance (HMF)operative Milk Producers' Union Limited

(KDCMPUL), Gujarat. Additional funds VII.1 NHB has been at the forefront of Housing for the above disbursements were provided Microfinance (HMF) initiatives by giving by NHB from its Special Fund. One national financial assistance to MFIs in various parts level workshop on water and sanitation has

of the country. The Bank has recognised been organized in Nagpur, under the

Community Based Financial Institutions Programme.

(CBFIs) as delivery mechanisms for VI.2.5 MOU with IFC and State Government of channelizing housing finance to the un-

Rajasthan: NHB, International Finance served and the underserved at the local and Corporation (IFC) and Government of decentralized level. Accordingly, NHB has Rajasthan (GoR) have entered into a developed a Housing Microfinance partnership and signed a Memorandum of Programme to cater to the needs of this Understanding (MoU) to promote low and

section of society.moderate income housing in the State of

`

`

National workshop on water and sanitation at Nagpur Signing of Memorandum of Understanding between

National Housing Bank, International Finance Corporation and Govt. of Rajasthan in the presence of Minister of State for Finance, Sh Namo Narain Meena


127

VII.2 Under the Housing Micro Finance, the Study has covered both qualitative and Bank's focus is to develop sustainable quantitative aspects of the lending human habitats which are eco-friendly, cost Programme. Apart from studying the effective and productive. Work sheds form impact of the HMF Program, the study will an integral part of all housing projects with also help in deriving essential policy inputs necessary water and sanitation facilities. that could contribute to the scheme's Incremental housing (repair/renovation) overall effectiveness and identification of assumes significance in the context of factors which can expand the scope and affordability and sustainability of the potential of HMF assistance provided by programme. Housing microfinance (HMF) NHB.programme of Bank, during the last few The Study focussed on analysing the years of operation, has displayed fulfilment of HMFs objective, its encouraging results. geographic expansion and coverage,

VII.3 The Bank's Housing Micro Finance (HMF) assessment of the role played by NHB and programme started in 2004, and the Bank client MFI's, assessment of borrower's has sanctioned loans to 29 microfinance profile relating to various economic and institutions in 11 States in the country. demographic indicators such as age, During the year 2010-11, funds were gender, income, etc. The purpose of the disbursed to 6 new MFIs and extended to 3 S t u d y w a s t o s u g g e s t v a r i o u s new States viz. Gujarat, Uttar Pradesh and factors/parameters for enhancing West Bengal. The program has resulted into /widening the scope and operations of construction/repair and renovation of NHBs HMF Programme. 24,255 housing units located in both urban Box IIIand rural areas of the country. The

Key Findings of the Study on NHB's beneficiaries include farmers, petty traders, Housing Micro Finance Programme artisans, dairy workers and other low (2007-2010)income households. More than 90per cent

of the beneficiaries were women. ?HMF is in a nascent stage in the Indian micro-finance sector. There are very few examples to demonstrate its scalability and impact on the target sections.

?The sanctions data is showing constant addition of new clients and disbursements over the period showing diversification from the southern states of Tamil Nadu and Andhra Pradesh.

?Average amount of loan is showing decreasing trend over the period of study primarily due to the fact that majority of loans are taken for the purpose of repairs and renovation and not for new construction.

?Majority of borrowers belong to the 30-40 years age bracket and are employed in

VII.4 Study on Housing Micro Finance (HMF) - agriculture sector or depend on Assistance provided by NHB: The Bank agriculture for livelihood. had conducted a study on the Impact ?Majority of borrowers have monthly Analysis on the HMF assistance provided household income ranging from 5000 to by NHB to evaluate and assess the impact 10,000. of NHB's assistance provided to MFIs. The

``


128

?Majority of the beneficiaries are charged the enable Primary Lending Institutions rate of interest between 12per cent to 15per (PLIs) to access funds for extending cent. housing finance to targeted groups in rural

?Women borrowers are major beneficiaries areas at competitive rates. The corpus of forming 80per cent of total borrowers the fund since the year 2008-09 has under the programme. remained at 2000 crore for each year. A

total amount of 5778.18 crore has been ?Micro Finance Institutions (MFIs) provide received by the Bank under the Fund, and an innovative channel to finance housing

for the poor. However, the ability for the Bank has deployed the full amount microfinance institutions to provide towards refinance for rural housing for the housing continues to be difficult, mired in target groups. Most of the lending under concerns over scarce funding, legal risks the Rural Housing Fund has been for arising from informal land title, lack of housing loans of less than 5 lakh, which collateral and insufficient knowledge

shows that the Fund has been utilized for about construction

its intended purposes.?To conclude, Housing Microfinance (HMF)

IX.1.2 With the advent of the Rural Housing Fund programme of Bank during the last four

at competitive rates, many institutions viz. years of operation, has displayed

Housing Finance Companies, Regional encouraging results. However steps need Rural Banks (RRBs) etc. have entered into to be taken to expand its outreach and the rural housing landscape, thereby ensure its holistic development. For a resul t ing in bet ter geographical holistic development of programme, there distribution and increased penetration of is a need for concerted efforts on the part of

all the stakeholders towards capacity- housing loans among the underprivileged building measures and establishing segments of the society. Further, the linkages with institutions that have a success of RHF has also introduced a fair strong presence in the rural sector. amount of understanding of the

characteristics and contours of the rural

housing finance market, enabling the During the year 2010-11, Profit before tax

various players to design better and more was 399.20 crore as against 422.10 crore targeted products for the rural populace. during the previous year, registering a

decline of 5.43 per cent. Similarly, the IX.1.3 The Housing Finance Companies have, in Profit after tax, which stood at 278.93 all, disbursed 1687.54 crore under the crore as against 280.24 crore during the Rural Housing Fund, which has helped in previous year, shown a decline of 0.47 per

creation of dwelling units for women, cent. As a result of plough back of Profit to

marginal farmers, small artisans, members Reserves, the Net Owned Fund of the Bank

of scheduled castes and scheduled tribes increased from 2,485.32 crore to 2,770.23

and minority communities. Similarly, the crore during the year.RRBs have now taken up housing finance

as a major focus area. The Bank has, during

2010-11, added 6 new Regional Rural

Banks as its refinance clients. Through IX.1 Rural Housing FundRRBs, an amount of 134.12 crore was

IX.1.1 The Hon'ble Finance Minister, in his Union disbursed under the Rural Housing Fund. Budget speech for 2008-09, announced the Efforts are being made to encourage more setting up of the Rural Housing Fund to RRBs across the country to take up rural

VIII. Financial Performance: 2010-11

General Activities

IX Rural Housing Finance

`

`

`

` `

` ``

` `

`


129

housing finance in a major way and to Scheme aims to provide the rural

avail refinance from NHB for this purpose, households a formal platform for

which will go a long way in promoting sophisticated access to housing finance to

housing finance in rural areas throughout enable an individual to either build a

the country. modest house or improve/add to his

existing dwelling unit. IX.1.4 To promote housing finance in the deep and

remote rural areas, a few Public Sector IX.2.2 The success of the Scheme can be attributed

Banks, which had met the priority sector to the fact that over 31 lakh dwelling units

targets for the year 2009-10 and had have been financed under the Scheme since

therefore not contributed to the allocation its inception through various PLIs viz.

under Rural Housing Fund for 2010-11, Housing Finance Companies (HFCs),

availed refinance assistance in respect of P u b l i c Se c t or Ba n k s ( P SBs ) a n d

their lending to weaker sections for Cooperative Sector Institutions. The

housing in rural areas having population allocation of targets to various PLIs under

of upto 5,000 as per the 1991 Census. An the Scheme as well as its monitoring is done

amount of 182 crore has been provided to by the National Housing Bank.

Public Sector Banks under this Scheme in IX.2.3 Performance during 2010-11: During the 2010-11. year 2010-11, a total of 2,93,721 units were

IX.2 Golden Jubilee Rural Housing Finance financed by HFCs and PSBs under the

Scheme Scheme as against a target of 3,75,000 units

thus accounting for 78 per cent IX.2.1 The Golden Jubilee Rural Housing Finance a c h i e v e m e n t . T h e c o n s o l i d a t e d Scheme (GJRHFS) was launched on the performance of HFCs and PSBs under the occasion of the Golden Jubilee of the Scheme during the last two years can be nation's Independence in 1997. The outlined as below:

`

Table V: Golden Jubilee Rural Housing Finance Scheme: Performance during 2009-10 & 2010-11

Institution Target Achievement Percentage Achievement

2009-10 2010-11 2009-10 2010-11 2009-10 2010-11

HFCs 87,500 93,750 78,207 1,20,111 89 128

PSBs 2,62,500 2,81,250 3,09,585 1,73,610 118 62

Total 3,50,000 3,75,000 3,87,792 2,93,721 111 78

(Number of dwelling units)

Table V: Golden Jubilee Rural Housing Finance Scheme: Performance during 2009-10 & 2010-11


130

IX.2.4 Cumulative Performance under the financed by the HFCs and PSBs as against a Scheme: In terms of achievement, the target of 33,55,000 dwelling units performance of the Scheme since its (approximately 94 per cent of the target) inception has been laudable, as can be during the period from 1997 to 2011. The concluded by the fact that a total of progress of the Scheme since the inception 31,52,967 dwelling units have been is as follows:

Table VI: Golden Jubilee Rural Housing Finance Scheme: Cumulative Performance

Year Target Achievement Amount disbursed

( ` in crore)

1997-1998 50,000 51,272 ---

1998-1999 1,00,000 1,25,731 ---

1999-2000 1,25,000 1,41,363 ---

2000-2001 1,50,000 1,58,426 ---

2001-2002 1,75,000 1,87,268 3246.03

2002-2003 2,25,000 1,78,200 3816.34

2003-2004 2,50,000 2,43,753 6353.82

2004-2005 2,50,000 2,58,562 6440.95

2005-2006 2,75,000 2,98,651 8367.86

2006-2007 3,30,000 2,98,426 7664.58

2007-2008 3,50,000 2,71, 537 8844.81

2008-2009 3,50,000 2,58,265 10337.88

2009-2010 3,50,000 3,87,792 15,565.24

2010-2011 3,75,000 2,93,721 14,814.91

Total 33,55,000 31,52,967

IX.2.5 The performances of HFCs and PSBs under the Scheme have continuously been X.1 As part of its developmental role, NHB has improving over the last few years. equity participation in two Housing However, the performance of PSBs during Finance Companies viz Cent Bank Home the current year was slightly unimpressive Finance Limited (Sponsored by the Central and keeping in view that the PSBs have Bank of India) and Mahindra Rural been able to achieve only 62 per cent of Housing Finance Limited (a company their target during the current year as formed for extending housing finance compared to 118 per cent during the last exclusively in rural and semi-urban areas). year, the target for the year 2011-12 has The realizable value of equity holding in been kept fixed at 3,75,000 dwelling units. these two HFCs as on 30-06-2011 stood at For further improved performance of the 11.97 crore.HFCs and PSBs, the Scheme is being

X.2 During the year 2010-11, the Bank has also closely monitored by NHB. agreed to subscribe to the equity of a new

X Equity Participation

`


131

Housing Finance Company being formed Company subject to which certificate is in the State of Rajasthan to cater to the granted and observance by the Company housing finance needs of the low and of the provisions of the Act and the middle income segments in the State. The directions/guidelines issued there-under.proposed new company is to be formed in XI.1.3 During the year, the Certificate of collaboration with the Government of Registration was granted to 5 new HFCs Rajasthan, the International Finance viz. Home First Finance Company India Corpora t ion and Pr iva t e Sec t or Pvt. Ltd., Aadhar Housing Finance Pvt. Institutions. Ltd., Equitas Housing Finance Pvt. Ltd.,

X.3 The Bank has also, during 2010-11, Muthoot Housing Finance Company Ltd. subscribed to the equity share capital of & Shubham Housing Development Central Registry of Securitisation Asset Finance Company Ltd. As on June 30, 2011 Reconstruction and Security Interest of the total number of HFCs registered with India (CERSAI). The Company is a NHB stood at 52 of which 33 companies G o v e r n m e n t C o m p a n y w i t h a have been granted Certificate of shareholding of 51per cent by the Central Registration without permission to accept Government. Select Public Sector Banks public deposits.and the National Housing Bank are the XI.1.4 During the year Bank has cancelled the other shareholders of the Company. Certificate of Registration of 5 companies.

Aindri Housing Finance & Pvt. Limited, SRS Housing Finance Limited & Utkal XI.1 R e g u l a t i o n o f H o u s i n g F i n a n c e Housing Finance Limited surrendered Companies (HFCs)their Certificates of Registration, as they

XI.1.1 The HFCs, which are dedicated institutions were not undertaking housing finance for housing finance in the country, are business. Further, IDBI Home Finance regulated and supervised by the National Limited surrendered the CoR as the Housing Bank under the provisions of the company is merged with the parent Bank. National Housing Bank Act, 1987 and the The Certificate of Registration of Jahnavi directions and guidelines issued there- Home Development and Finance Limited under from time to time. The measures of was cancelled due to its non compliance regulation include stipulation of with the Directions/Guidelines issued by prudential norms, transparent and the Bank.standardized accounting and disclosure

XI.1.5 Notif icat ion of HFC under the policies, fair practice code, asset liability SARFAESI Act: During the year 2010-11, management and other risk management India Infoline Housing Finance Limited practices etc. These measures have helped has been notified under the SARFAESI Act to ensure the development of the sector on by Ministry of Finance, Government of healthy and sustainable lines.India.

XI.2 Registration/Cancellation of CoRs for HFCsXI.2 Supervision of HFCs

Companies desirous of commencing the XI.2.1 NHB supervises the working of HFCs business of housing finance are required to

through a system of on-site inspections, obtain a certificate of registration from the market inte l l igence and of f -s i te National Housing Bank. The certificate is surveillance for which periodic returns granted after the Bank is satisfied that the have been prescribed.applicant companies fulfil led the

conditions for grant of such certificate XI.2.2 During the year, the Bank inspected 44 prescribed under the National Housing HFCs, out of which 36 were regulatory Bank Act, 1987. The continuance of the inspections to ensure compliance of the registration depends on the continued p r o v i s i o n s o f t h e A c t a n d t h e compliance of the conditions by the Directions/Guidelines thereunder and 8

XI. Regulation and Supervision


132

were in connection with the grant of 11, 2010. The new Guidelines include all Certificate of Registration to new aspects of loan sanctioning, disbursal and companies. Close monitoring of the repayment issues, in order to bring more submission of quarterly, half-yearly and clarity and transparency. The new Fair annual returns by HFCs was undertaken. Practices Code is in alignment with the RBI

Code for NBFCs in the related areas. XI.2.3 The Bank vide its Circular dated May 01, 2007, specified minimum Net Owned Fund XI.4.3 Further, Bank has also issued revised (NOF) of 2 crore for a housing finance Guidelines on Asset-Liability Management company which carries on the business of System for HFCs vide Policy Circular housing finance by March 31, 2008. As on No.35/2010 dated October 11, 2010. The date Ind Bank Housing Ltd. is the only revised ALM guidelines are applicable to all company having NOF less than 2 crore. HFCs irrespective of whether they are Ind Bank Housing Ltd. confirmed that it accepting / holding public deposits or not. was not undertaking any new housing XI.4.4 Keeping in view the direction received finance business. from Government of India, Ministry of

XI.3 Important Notifications Finance and taking into account the discussions held with CEOs of HFCs, NHB XI.3.1 Increasing the requirement of minimum has issued directive to all HFCs not to NOF – The Bank vide its Notification No. charge any prepayment charges/pre-NHB.HFC.REG-4/CMD/2011 increased payment penalty in case the outstanding the requirement of minimum NOF of HFC loan amount is paid by the borrowers out of from 2 crore to 10 crore to be eligible to his/her own sources (Circular No- NHB commence or carrying on the business of (ND)/DRS/Pol-No-36/2011 dated October HFI on or after June 18, 2011.18, 2010).

XI.3.2 The Bank has also specified the minimum XI.4.5 Keeping in view the latest provisions of RBI NOF requirement for all the existing

applicable to Commercial Banks, NHB has registered HFCs desirous of carrying on the also issued the Circular No- NHB business of housing finance institutions ( N D ) / D R S / P o l - N o - 3 7 / 2 0 1 1 d a t e d beyond March 31, 2014 in the following December 24, 2010 on LTV Ratio, Risk phased manner-Weights and Provisioning requirements

(i) 4 crore by June 30, 2012, etc. (ii) 7 crore by June 30, 2013 and XI.4.6 Bank has advised all HFCs vide its Circular (iii) 10 crore by March 31, 2014 No-NHB(ND)/DRS/Misc./Cir No.2/8792

/2010 dated December 28, 2010 to become XI.4 Revised KYC Guidelines, Anti Money member of at least one credit information Laundering Measures, Fair Practices Code company and provide them the current data & Asset-Liability Management Systemin accordance with the provisions of the

XI.4.1 During the year, the Bank has issued C r e d i t I n f o r m a t i o n C o m p a n i e s revised Guidelines on 'Know Your ( R e g u l a t i o n ) A c t , 2 0 0 5 a n d t h e Customer (KYC) ' & 'Anti Money Rules/Regulations framed thereunder. Laundering (AML) Measures' for HFCs HFCs are also advised to ensure that no vide Policy Circular No.33/2010 dated wrong data/ history regarding borrowers October 11, 2010. The Bank has issued the are given to Credit Information Companies.revised guidelines in the light of subsequent

XI.5 Coordination with Other Regulatory developments including amendments in Authoritiesthe Prevention of Money Laundering Act

and Rules framed there under. XI.5.1 For the holistic integration of the housing finance sector with other financial XI.4.2 The Bank has also issued revised institutions, NHB continued to engage with Guidelines on Fair Practices Code vide other Regulatory Authorities through State Policy Circular No. 34/2011 dated October

`

`

` `

`

`

`


133

XI.6.3 Training Programme on Asset Liability Level Coordination Committee (SLCC) meetings convened by the Reserve Bank of Management (ALM) for all HFCs - India, the Police Department, officials of the Recognizing the importance of Asset State Government in Ministries / Liability Management in the smooth Department of Home Finance, Law, functioning of the Housing Finance Economic Offences Wing, Registrar of Companies, a workshop for all the HFCs on Companies, Company Law Board, ALM system was organized on 25th and Securities and Exchange Board of India, 28th February, 2011. The objective of the Institute of Chartered Accountants of India Programme was to enable the participants at State/Regional levels etc. During the to understand the need, role, scope and year 2010-11, NHB participated in the State relevance of ALM function in their overall Level Co-ordination Committee meetings business management. There was an convened by the Regional Offices of RBI for overwhelming response as it was attended the States of Delhi, Andhra Pradesh, by the various executives in the Junior and Haryana, Jharkhand, Jammu and Kashmir, Middle Management Grade from almost all Madhya Pradesh, Gujarat, West Bengal, the HFCs.Rajasthan, Orissa, Assam, Himachal Pradesh, Punjab and U.T. Chandigarh.

XI.6 Other ActivitiesXII.1 Complaint Redressal Mechanism

XI.6.1 Meeting with Major HFCs: Housing Loan XII.1.1 The Bank has set up Complaint Cell to for bribery case - A meeting of Chief

ensure prompt redressal of customer Executive Officers of 22 major Housing Finance Companies was held on complaints and grievances against HFCs. December 8, 2010 to discuss, inter-alia, the Further, the Bank has also uploaded the process of sanctioning, disbursal, post complete details on NHB Website d i s b u r s a l m o n i t o r i n g , s e c u r i t y , (www.nhb.org.in/Regulation/Complaintstrengthening of internal mechanism and _Cell) regarding role of the Complaint Cell process, etc. After detailed discussions, the for addressing the complaints received Bank has advised all the HFCs to ensure from public against HFCs. the strengthening of their loan process.

XII.1.2 National Housing Bank is also a member Further, the Bank vide letter dated

organization of the Centralized Grievance February 14, 2011 has also introduced a R e d r e s s a n d M o n i t o r i n g S y s t e m special quarterly return on HFCs top 10 ( C P G R A M S ) o f D e p a r t m e n t o f major exposures to corporates / Administrative Reforms and Public builders/companies etc.Grievances (DARPG) which is aimed to

XI.6.2 Training Programme for Auditors of providing citizens with a platform for HFCs- A comprehensive training redressal of their grievances. The programme was organized exclusively for

complaints received on PG Portal related to the Auditors of Housing Finance

NHB are being monitored on a regular Companies in Jaipur in August, 2010 with

basis and are promptly disposed off. the coordination and support of the local

XII.1.3 During the financial year 2010-11, the Bank chapter of ICAI. The aim of the Programme had received a total of 432 complaints, out was to sensitize and apprise the auditors on of which 412 complaints have been settled. the requirements of HFCs under For the pending 20 complaints constant applicable provisions under NHB Act, 1987

and other directives under Housing monitoring is on with the concerned HFCs Finance Companies (NHB) Directions, for early disposal. 2001. The programme was very well received by the participant auditors.

XII. Business Planning and Promotion Activities


134

XII.2 Meeting with CEOs of HFCs and Senior stakeholders with developments in the Officials of PSBs including select RRBs sector – global as also national through

Presentations made by experts in the sector.XII.2.1 As a regular practice, NHB organises meetings with the Chief Executives of XII.2.3 Further, considering the focussed entry of Housing Finance Companies and Senior the Regional Rural Banks (RRB's) in rural Officials of Public Sector Banks including housing finance, exclusive session for RRBs select Regional Rural Banks on a periodic was convened during each of these two basis as also as and when required in order meetings. During these sessions, the to recognise and review the various developments and role of RRBs in rural developments in the housing and housing housing as also their delivery mechanisms finance sector. in addressing the problems of the rural

housing sector were acknowledged and XII.2.2 During the year 2010-11, two such meetings appreciated.were organized by NHB to discuss and

review the developments of the sector XII.3 World Habitat Day Celebrations 2010

XII.3.1 The United Nations has designated the first Monday in October every year as “World Habitat Day” to reflect on the state of human settlements and the basic right to adequate shelter for all. It is also intended to remind the world of its collective responsibility for the future of the human habitat. This year, the World Habitat day was celebrated on October 4, 2010 with the theme “Better City, Better Life”.

XII.3.2 The National Housing Bank has been celebrating the World Habitat Day every year as an annual event through various activities viz. Essay Competition, release of

during the year 2010-11. Besides booklet containing award winning essays, deliberating on sectoral issues and the Habitainment Quiz etc. concerns of the Primary Lending

XII.3.3 Essay Competition: During the year 2010-Institutions, these forums were utilized to 11, an essay competition was conducted by understand the needs of the lending NHB to celebrate the World Habitat Day institutions. Further, issues of mutual 2010. The following three topics of the interest like Rural Housing viz. Golden Competition were based on the theme of Jubilee Rural Housing Finance Scheme the WHD viz. “Better City, Better Life”:(including performance of PLIs under the

1. Inclusive Development is a Pre-requisite Scheme) and Rural Housing Fund, for the Formation of a Better City and Affordable Housing, Reverse Mortgage Ensuring Better Life. Loan-Annuity Product, housing and

housing finance for the poor, Interest 2. Smart Cities are built on the foundation of Subsidy Scheme for Housing the Urban Efficient Houses and Buildings. Poor (ISHUP), 1per cent interest

3. Role of Housing and Housing Finance subvention scheme, grievance redressal towards Ensuring a Better City and Better mechanism, central electronic registry, Life. energy efficient residential housing and The Competition was open to all employees other research and development activities of All India level financial institutions, were also discussed and reviewed during Housing Finance Companies registered these meetings. The meetings were also with the National Housing Bank and used as a platform to provide the

Shri R.S. Garg, GM, NHB addressing the CEOs of HFCs & Senior Officials of PSBs


135

Banks. Further, to felicitate the winners of Tourism, Kumari Selja and Shri R. V. the World Habitat Day 2009 Essay Verma, Chairman and Managing Director, Competition, a prize distribution ceremony National Housing Bank. was organised on October 04, 2010 at NHB, XII.4 Development and Research Advisory New Delhi. Committee

XII.3.4 Habitainment Quiz: Besides the Essay XII.4.1To review, guide and advise the Competition, a fun-filled event called development activities of the Bank viz “Habitainment Quiz 2010” was also research studies, economic analysis,

capacity building initiatives etc as also provide feedback on the Bank's new initiatives, a Development and Research Advisory Committee was constituted by the Bank in the year 2008. The Committee is chaired by CMD, NHB and has four external experts besides the ED of NHB as members. The fifth meeting of the Development and Research Advisory Committee of NHB was convened on March 28, 2011 at New Delhi. During the Meeting, the issues pertaining to research and development activities of NHB were discussed. These included Residex, Valuation Standards, NHBs Five Year

organized by NHB on the occasion of WHD Business Plan, Establishment of a Training 2010. The quiz was open to the institutional and Research Institute, Asia Pacific Union and individual members of the India for Housing Finance (APUHF) etc. Habitat Centre. The idea behind the event XII.5 Promotional Programme for Energy was to raise awareness on the significance Efficient New Residential Housing in of “World Habitat Day” and to provide an India opportunity to the employees and

XII.5.1 The National Housing Bank (NHB) members of India Habitat Centre to bond in executed an Agreement with KfW, a fun-filled and informative event. The Germany (the development Bank of event witnessed participation from over Germany) to promote energy efficient 100 teams from amongst the various housing in India. The Agreement was signed between the two agencies at New Delhi on December 31, 2010 under which NHB will borrow an amount of EURO 50 million comprising EURO 12 million under concessional IDA window and balance EURO 38 million under the normal window.

XII.5.2 This initiative is an outcome of the continued dialogue between Government institutional and individual members.of India and Federal Republic of Germany

XII.3.5 Launch of NHB-AWE 2010: The 2010 for promotion of a Programme on “Energy edition of the NHB-AWE booklet was Efficient New Residential Housing in released at a function organized by the India” with NHB acting as the programme Ministry of Housing and Urban Poverty implementation agency, in its capacity as Alleviation by the Hon'ble Minister of the apex housing finance body. Housing and Urban Poverty Alleviation &

Habitainment Quiz 2010 at India Habitat Centre, New Delhi

Release of NHB’s Award Winning Essays by Kumari Selja, Minister of Housing & Urban Poverty Alleviation & Tourism


136

XII.5.6 The Programme is expected to address a niche market segment for promoting energy efficiency in the housing sector in the country and will seek to serve the Government's overarching environment related goals.

XII.6 Risk Management

XII.6.1 The Bank has its Risk Management System in place to monitor the risk of the Bank. For this purpose the Bank has constituted the following Committees:

(i) A s s e t L i a b i l i t y M a n a g e m e n t XII.5.3 As per estimates, the residential housing Committee (ALCO) which monitors

sector accounts for approximately 30per the management of market risk of the cent of the total energy consumption in the Bank.country. Promotion of Energy Efficient

(ii) Credit Risk Management Committee residential housing is also an important (CRMC) which monitors the credit objective laid down in the National Urban risk of the BankHousing and Habitat Policy, 2007,

formulated by the Government of India, (iii) Operational Risk Management Ministry of Housing and Urban Poverty Committee which monitors the Alleviation. operation risk of the Bank.

XII.5.4 Considering it to be a new market in India, KfW and NHB conducted a feasibility XII.6.2 The Bank has a Board appointed Risk study to assess the potential market for Management Advisory Committee such Programme, including the lending (RMAC) with three external members who programme through NHB. Based on the

are experts in matters concerning Banking findings of the feasibility study, the crucial

and Finance. During the year 2010-11, the features of the Promotional Programme

Committee met four times to review the were designed which inter-alia envisage

Bank's risk management Policies and NHB's lending for individual housing

functions in relation to the three areas of l o a n s t h r o u g h P r i m a r y L e n d i n g

risk mentioned above.Institutions (PLIs) for purchase of

XII.7 Regional Office/Regional Representative apartments in certified energy efficient Officesprojects. The Programme seeks to save

energy levels in residential housing to the XII.7.1 The Bank has one Regional Office (RO) at extent of 30per cent through both active and M u m b a i a n d s e v e n R e g i o n a l passive measures viz. adopting an efficient Representative Offices (RROs) each at architectural design, using construction Hyderabad, Chennai, Bangalore, Kolkata, material of required standards, installing Lucknow, Ahmedabad and Patna. The energy efficient electrical, electronic Patna RRO was opened during the year appliances etc. 2010-11.

XII.5.5 Further, NHB and KfW have appointed an XII.7.2 The role of RO/RROs is to assist the Head international consultant for design and Office (HO) of the Bank in various activities development of the assessment tool for the viz. business development, building Programme. The same is proposed to be relationship with the Government carried forward for introduction of agencies, Banks, Financial Institutions, standards and regulatory certification tools

Housing Finance Companies, MFIs, NGOs and processes, eventually, to come on par

e tc , represent ing HO in var ious with the best international regulatory

m e e t i n g s / s e m i n a r s / c o n f e r e n c e s , standards.

NHB Signs Agreement with KfW, Germany for Promoting Energy Efficient Housing

137


inspection etc. Besides this, Mumbai H o u s i n g F i n a n c e ' b e s i d e s ' R i s k Regional Office also acts as the DR Site of Management and Asset Liabi l i ty the Bank and contributes to some financial Management'. For the first time in its operations of the HO. history, the Bank held a training

programme exclusively for women. Titled 'Mortgage Finance for Homes', the training

XIII.1 Capacity building and sensisting the programme drew appreciation from all personnel in the Sector has been one of the corners. Important issues like 'Prevention many endeavours of the National Housing of Frauds' and 'KYC-FPC' which have been

engaging the attention of the financial sector in the country were also discussed at length in the programmes conducted by NHB by way of dedicated programmes. Topics like 'Customer Service' were introduced in the syllabus to give the participants a better understanding of behavioural issues.

Bank since its inception. A multi pronged XIII.4 As an exclusive Capacity Building initiative

strategy has been adopted to address the for Regional Rural Banks and Micro

needs of this Sector with regard to training Finance Institutions, the Bank conducted

and development of personnel working in eight dedicated training programmes

the Sector. Besides conducting training defraying the entire expenses. These

programmes, seminars and symposiums programmes act not only as the platform

providing design and faculty support as for exchange and dissemination of

well as sponsoring programmes conducted knowledge, but also perform as vehicles of

by other institutes remains one of the strong goodwill and publicity for the Bank.

pillars of NHBs promotional and XIII.5 The programmes have been organized in development roles. These programmes are

different regions so as to give a wider on subjects related to housing and other geographical coverage in terms of current topics relevant to the sector for the participation. During the financial year, officials of HFCs, banks, and co-operative p r o g r a m m e s w e r e c o n d u c t e d i n Sector institutions.Ahmedabad, Ooty, Bhubaneswar,

XIII.2 During the year, the Bank has organized Bengaluru, New Delhi , Agartala ,

fifteen training programmes, the highest in Naharlagun (Arunachal Pradesh), Nagpur,

any calendar year till date. More than 400 Patna, Raebareilly (Uttar Pradesh),

participants, which is also the highest for Mumbai, New Delhi, Kannur (Kerala), Visakhapatnam and Chamba (Himachal Pradesh).

XIV.1 The Corporate Communications of the

Bank have been aimed at increasing its

brand awareness and visibility by any financial year, from various PLIs viz. associating the Bank's functions directly Housing Finance Companies, Banks, with the consumers. The initiatives under Regional Rural Banks and Micro Finance corporate communications include Institutions participated in these training sponsorship of events, tie-up as knowledge programmes.

partners with other corporates, regular XIII.3 The training programmes covered topics interactions with the electronic and print

related to housing finance such as 'Rural media, corporate advertisements and press Housing Finance' and 'New Products in

XIII Capacity Building

XIV Corporate Communications

Training Programme on 'Mortgage Finance for Homes'for Women Executives

Training Programme on 'Rural Housing Finance'


138

XV.3 Redemption of RMBS poolreleases for various initiatives of the Bank.

During the financial year 2010-11, the XIV.2 Advertisements in the regional magazines Class 'A' PTCs of one of the residential helped the Bank cover a wider audience mortgage backed securitization base and helped build a brand image. The transaction of 77.16 crore have been Bank was featured from time to time in the fully redeemed and the Special national and regional media for its schemes Purpose Vehicle Trust has been

and initiatives in the housing finance successfully closed.

sector. The events organized by the Bank

made its corporate presence felt amongst

XVI.1 File Tracking Systemthe related institutions.

XVI.1.1 File Tracking System - FTS (Ver 4.0) is a web based multilingual application which helps in tracking the movement

XV.1 NHB has so far completed fourteen of files and receipts. The application

residential mortgage backed securitization enables the users to maintain a

(RMBS) transactions involving 38,809 consistent watch over the movement of individual housing loans of six Housing various important Files and Receipts at Finance Companies (HFCs) and one different levels in the process of Scheduled Commercial Bank, amounting decision-making. The salient features to 862.20 crore. The success of the issues of the system are as follow:

of RMBS has significantly provided a ?Diarising of the receipts means to better understanding and

?Opening of new files addressing the various legal, regulatory,

?Linking the receipt to a file fiscal, accounting and other capital market ?Files/Receipts Movement related issues relating to such transactions

as also various policy issues for a conducive ?Retrieval of information through environment for such issuances. The powerful Search

structure of NHB's RMBS issues has been ?Record management designed under the provisions of the

?Dispatch of Files/Receipts National Housing Bank Amendment Act,

?Generation of reports2000 (Sections 14 (ea), 14 (eb), 14 (ec) and XVI.1.2 With the aim of systematically 18), which authorize the Bank to carry out

m a i n t a i n i n g a n d c o n t r o l l i n g securitization transactions and issue information from its creation to mortgage backed securities as trust disposal, and establishing an efficient certificates of beneficial interest and act as and effective mechanism for storing and

Trustee for the holders of such securities.retrieving information, the Bank has

XV.2 Performance of the Pools of Housing loans procured National Informatics Centre's Securitized File Tracking System software (FTS).

The Software has been implemented in NHB has appointed the respective the Bank in a phased manner. In Phase I, originators as Servicing and Paying Agents l e t t e r m o v e m e n t s y s t e m w a s (S and P Agents) to ensure that collections in implemented and since January 2011 all

respect of each of the pool of securitized l e t t e r s / r e c e i p t s r e c e i v e d a n d

loans are distributed to the respective PTC dispatched are routed through FTS. holders and Service providers. The yields to Currently, implementation of Phase II is Class A PTC holders have been consistent under way.with that indicated at the time of issuances.

XVI New Initiatives

XV R e s i d e n t i a l M o r t g a g e B a c k e d

Securitization (RMBS)

`

`


139

XVI.2 Refinance Scheme for Promoting XVII.1.3 The Scheme is meant for the Senior Energy Efficient Housing Citizen borrower(s) over the age of 60

who can mortgage the house property As a part of its joint initiative with KfW to a bank/HFC, which then makes of Germany to promote energy periodic payments to the borrower(s) efficient housing in the country, the during the latter's lifetime for a Bank has launched a refinance scheme maximum period of 20 years. The for Housing Finance Companies and Senior Citizen borrower is not required Bank for their housing loans extended to service the loan during his lifetime for certified new energy efficient

housing units. With a number of new and therefore does not make monthly energy efficient housing projects repayments of principal and interest to coming up across the country, this the lender. Only on the borrower's Scheme is expected to catalyze the death or on the borrower permanently market for energy efficient housing leaving the house property, the loan is units. repaid along with accumulated

interest, through sale of the house property. The borrower(s)/heir(s) can

XVII.1 Reverse Mortgage Loan (RML)also repay or prepay the loan with

XVII.1.1 N H B c o n c e p t u a l i z e d R e v e r s e accumulated interest and have the M o r t g a g e L o a n S c h e m e a n d mortgage released without resorting to formulated the Operational Guidelines sale of the property. for RMLs in India in May 2007 to enable

XVII.1.4 As per information available, as on the Scheduled Commercial Banks June 30, 2011, 23 Banks and 2 HFCs

have launched the RML Scheme and 1740 crores have been sanctioned to

8903 senior citizen borrowers.

( S C B s ) a n d H o u s i n g F i n a n c e Companies (HFCs) extend RML to senior citizens to help them avail of monthly stream of income against mortgage of his/her house. The Central Government notified the Reverse Mortgage Scheme vide its notification No. S.O. 2310 (E) dated 30th September, 2008.

XVII.2 Reverse Mortgage Loan enabled XVII.1.2 Conceptually, a Reverse Mortgage Annuity (RMLeA)

Loan enables the conversion of the XVII.2.1 RMLeA was launched by NHB in owner's equity in his/her otherwise

association with Star Union Dai-ichi illiquid house asset and get a stream of

Life Insurance Company Ltd., (SUD fund inflows throughout the life time

Life) and Central Bank of India (CBI) in for meeting increased living expenses,

December 2009. RMLeA ensured while at the same time allowing the

assured life-time annuity payments to individual to continue to occupy the

the senior citizens bettering the RML house. which allowed maximum payment

XVII Reverse Mortgage Loan

`

Reverse Mortgage Loan Seminars organized by NHB


140

tenure of 20 years. The Scheme sources life-time annuity for the senior citizens XVIII.1 Portalsfrom a life insurance company through

XVIII.1.1 The Bank maintains its website at the Bank/HFC. which provides

XVII.2.2 NHB has formulated RMLeA's information about the Bank and its core O p e r a t i o n a l G u i d e l i n e s f o r and corporate functions. This website implementation by Primary Lending i s supplemented by Hous ing Institution. The RMLeA Scheme has Information Portal (HIP) which is a also been implemented by Central single point source of information for Bank of India and Union Bank of India housing and related activity across the in association with Star Union Dai-ichi country. The link of HIP has been Life Insurance Co. Ltd. provided in NHB Website. Housing

Information Portal (HIP) plans to XVII.3 Reverse Mortgage Counselling create a repository of information Centresabout the processes related to housing XVII.3.1 NHB continues with its endeavours to and housing finance and publish it on promote the RML programme by way the portal for the benefit of a wide of Counseling Programs and Seminars spectrum of users, thereby integrating for the elderly citizens of the country to the flow of information on these generate awareness amongst them and subjects.to enable them to take informed

XVIII.1.2 The portal was planned to be decision for availing RMLs. During the implemented in three phases. The first year 2010-11, NHB has organized and phase lays focus on individual conducted 16 Seminars for the senior buyer/seller/renter of property; the citizens in various cities of India.second phase is identified for Investors XVII.3.2 NHB has opened ten RML Counseling and Business Partners and the third centers, out of which three RML phase is for Policy Makers and Counseling Centres were opened Professionals. during 2010-11, in nine Indian cities

XVIII.1.3 The development of all the three phases v i z . A h m e d a b a d , B a n g a l o r e , of HIP has been completed and all Chandigarh, Chennai, Delhi (2), contents have been uploaded on the Hyderabad, Kolkata, Lucknow and p o r t a l f o r p u b l i c a c c e s s Mumbai, in association with eminent ( ) . The Non Government Organisations contents are being periodically working for the elderly. NHB has also reviewed/updated as per the review been working towards building the schedule during maintenance phase.capacity in the commercial banks and

HFCs for implementing the product by XVIII.1.4 The HIP serves as a window not only way of its training programmes and for a prospective buyer of property but seminars for the personnel of these also for those setting up a Housing institutions. Finance Company, developing a Real

Estate Project, formulating policy XVII.3.3 NHB has been carrying on with its guidelines for this sector, etc. as also for advocacy on various issues concerning housing and housing f inance i m p l e m e n t a t i o n o f t h e R M L . professionals.Significant among them was the issue

relating to taxation which was pursued XVIII.1.5 The Bank has also developed a with the Central Government, knowledge sharing and information eventually leading to tax exemption of portal for Asia Pacific Union for the payment received under RML by Housing Finance (APUHF) which is the senior citizen borrower. available at . The link

XVIII Information Technology Initiatives

www.nhb.org.in

www.housingindia . info

www.apuhf.info

http://www.nhb.org.in

http://www.housingindia.info

http://www.apuhf.info


141

of APUHF portal has also been operations through SAP solution. The provided at NHB's website. Asia Bank planned to deploy SAP in Pacific Union for Housing Finance Bilingual manner so that all data entry (APUHF) is a platform to act as a and report generation is possible in knowledge sharing and networking Hindi as well as in English. The medium. The forum intends to implementation of this project has been promote coalition and coordination completed. This project also promotes among the South Asia and Pacific Bank's initiatives towards increasing countries in determining their housing the use of Rajbhasha (Hindi) in official and housing finance solutions. It also work.tracks the events and happenings in the XVIII.2.3 In-house Software Development: housing markets globally. Although SAP is becoming the basic

XVIII.1.6 To enrich APUHF website with p la t form for enterpr i se wide country specific contents on housing integration of information, there are and housing finance so that the areas where various departments experience of different countries may require additional computer support. be shared, a “Country Specific Section” The Bank developed following has been developed on this web site. At software application in-house during

2010 & 2011:

Claim Reconciliation Software for 1per cent Interest Subvention Scheme: Government of India has appointed NHB as a nodal agency for 1per cent Interest Subvention Scheme for Housing Loan upto 10 lakh. Being a nodal agency, NHB receives claims for the aforesaid Scheme from selected Banks and HFCs. Bank has developed a web based application in-house to facilitate the reconciliation of claims to present, this section has been enriched ensure compliance with the check list with the contents pertaining to India, and to provide MIS for future Pakistan and Indonesia.reference.

XVIII.2 IT ProjectsXVIII.3 Information Security

XVIII.2.1 MPLS Connectivity for entire Bank: XVIII.3.1 Enforcement of Information Security T h e B a n k h a s e s t a b l i s h e d

Measures: The security of Bank's IT Multiprotocol Label Switching (MPLS) infrastructure is guided by the connectivity across its offices to make d i r e c t i o n s l a i d d o w n i n t h e its network infrastructure robust, and Information Security Policy (ISP). ISP secure. The MPLS connectivity has g i v e s d i r e c t i o n s t o w a r d s been established at HO, MRO and six implementation of Information Regional Representative Offices Security Framework for the Bank. The (RRO). For newly opened Regional implementation status of IS Policy is Representative Office at Patna, the verified by a third party IS-Auditor implementation is in process. The every year during its annual IS-Audit. MPLS implementation for NDS For the year 2010-11, the IS Audit application provided by RBI has also exercise has been completed and Audit been completed.compliance certificate has been issued

XVIII.2.2 SAP Bilingual: National Housing by the Auditors. To ensure continuity Bank has integrated its business of the business in a challenging

?

`

H.E. Suharso Monoarfa, Republic of Indonesia, and delegates visit

National Housing Bank Head Office at New Delhi

Minister of Housing


142

scenario and to minimise the offices over MPLS network. The access likelihood of occurrence and impact of this intranet application through (risk) of business interruptions, the NHB web-site will require add-on Bank has initiated the process of security infrastructure.preparing Business Continuity Planning (BCP) for the Bank as a whole. Under this, the document

XIX.1 Asia Pacific Union for Housing covering the business process of Finance (APUHF)various departments has been

prepared which was finalized by the IT XIX.1.1 Asia Pacific Union for Housing Finance Committee. In the 2nd phase, the (APUHF) is a platform to act as a document pertaining to “Risk knowledge sharing and networking A s s e s s m e n t , M i t i g a t i o n & medium. The Union intends to C o n t i n g e n c y P l a n ” i s u n d e r promote coalition and coordination preparation. These will be integrated among the Asia Pacific countries in to prepare overall BCP document for determining their housing and the Bank. housing finance solutions. APUHF

also tracks events and happenings in XVIII.3.2 I m p l e m e n t a t i o n o f V i d e o the housing markets globally. The Conferencing Solution: The Bank has Union focuses on initiatives taken by implemented MPLS in order to the different member countries in their establish reliable and secured own regional contexts. The users of the connectivity across its offices. The platform include member country Bank has planned to utilize this robust institutions engaged in housing and Wide Area Network (WAN) towards housing finance such as housing i m p l e m e n t a t i o n o f V i d e o finance institutions, construction Conferencing Solution (VCS) for its agencies, co–operatives, Government offices. Pan- India meetings of NHB agencies, policy and regulatory bodies, offices can be organized through video Central Banks, International Finance conferencing. The off ices can Institutions etc.c o m m u n i c a t e t h r o u g h v i d e o

conference with other organizations / XIX.1.2 National Housing Bank, India hosts the third party, using ISDN / Internet Secretariat for the Asia Pacific Union facility. Tendering process has been for Housing Finance. NHB is c o m p l e t e d f o r s e l e c t i n g t h e responsible for updating the content of implementation partner for this the portal in consultation with the project. member countries in the Advisory

Board.XVIII.3.3 Development of Intranet site: The Bank is in the process of developing a Box IVweb-application in-house to establish a Genesis and Launch of the Asia separate intranet s i te for a l l Pacific Union for Housing Financeapplications which are only accessible

A workshop on Housing Finance in to NHB officers. The intranet portal South Asia was conducted jointly by will be integrated with Bank's web-site the World Bank and IFC during May

through a password protected section 27-29, 2009 at Jakarta, Indonesia.

so that designated officer can also During the course of the workshop the

access applications/files related to proposal for establishing an e-platform

his/her work area from outside the for South Asia Region was discussed office premises. The development of between National Housing Bank, India the web application has been and World Bank with interest and completed and is accessible to all NHB support from other member countries.

XIX. D e v e l o p m e n t & P r o m o t i o n a l Initiatives


143

The proposal was jointly announced XIX.1.3 Meeting of the Advisory Board of the by the World Bank and NHB at the APUHF was held in November 2010 at Workshop and the proposal was well New Delhi. Different aspects of the received by all participating member working of Network were discussed at countries. It was proposed and

the meeting along with the way accepted by all participating countries

forward for the Union.that the initiative be termed as 'South Asia Housing Finance Forum' (SAHF). XIX.1.4 Asia Pacific Union of Housing Finance UNESCAP and UNHABITAT, in (APUHF) in associat ion with collaboration with National Housing Mongolian Mortgage Corporation Bank of India (NHB), launched an

(MIK), KfW and Frankfurt School of initiative on Pro-Poor Housing

Finance & Management organized a Finance in Asia-Pacific region around Workshop on Housing Finance during the same time. Both the above June 26-29, 2011 at Ulaanbaatar, initiatives are merged into a single

Regional Network and the name of the Mongolia. Part icipants of the network was changed to Asia Pacific Workshop on Housing Finance Union of Housing Finance (APUHF). included international housing

The National Housing Bank (NHB) in finance experts from housing finance association with the World Bank and institutions representing countries viz. International Finance Corporation Thai land, Phi l ippines , Japan, (IFC), organized a International Azerbaijan, Indonesia, Malaysia and Conference on Affordable Housing M o n g o l i a b e s i d e s I n d i a . and Housing Finance during January

Representatives from UN-HABITAT, 27-28, 2010 at New Delhi. The

IFC and NHB also attended the Conference had participants and

workshop. Latest information, expert s p e a k e r s f r o m A f g h a n i s t a n , perspect ives and ins ights on Bangladesh, Brazil, India, Indonesia, compelling topics confronting the Maldives, Mauritius, Pakistan, Sri policy makers, national governments, Lanka, South Africa and Thailand financial institutions and research besides IFC, World Bank and World

Bank Institute, Affordable Housing bodies were on offer during the Institute, ADB, Government of India – workshop. The Workshop showcased Central and State Government overview of best practices together Officials, Reserve Bank of India, Banks with specific country perspectives & Housing Finance Companies. adaptable to local contexts.Representatives from Civil Society

XIX.2 Study on Housing Finance Portfolio Organizations, academia, researchers of Scheduled Commercial Banks – and policy makers also participated in Trend Analysis 2005-09the Conference.

XIX.2.1 A study on housing finance portfolio of The Conference was preceded by SCBs was conducted by the National Launch of South Asia Housing Finance

Forum (SAHF Forum), a Knowledge Housing Bank to capture the trend sharing and Information Portal, analysis of housing loans of SCBs developed by the National Housing during the period 2005-09. The Study Bank. The launch was done by was conducted based on the Governor Abdul Qadeer Fitrat, of information available in the various Central Bank of Afghanistan in the

Basic Statistical Returns of the Reserve presence of the Special Invitees and the

Bank of India.delegates of the Conference.


144

Box V 31/03/2005 to 26.70per cent as on 31/03/2009.Key Highlights of the Trend Analysis

of Housing Finance Portfolio of SCBs ?Share of Metropolitan areas increased 2005-09 from 47.30per cent as on 31/03/2005 to

52.02per cent as on 31/03/2009.Growth in Housing Finance?Bank group wise information indicates ?The number of loan accounts (proxy for

that of the total outstanding housing number of houses) increased from loan portfolio, the share of rural areas 36.66 lakh as on 31/03/2005 to 57.10 has gone down in respect of all Bank lakh as on 31/03/2009, registering a groups viz. SBI Group (from 13.89per CAGR of 9.27per cent only.cent to 10.28per cent), Nationalized

?Housing loans credit limits registered a Banks (from 9.86per cent to 6.93per CAGR of 18.49per cent. cent), Other SCBs (from 7per cent to

?Average Credit Limit increased from 4.47per cent ), RRBs (marginally from 3.96 lakh to 5.93 lakh registering 4.62per cent to 4.57per cent) during the

CAGR of 8.41per cent. period 2005-09.

?Outstanding housing loans increased Bank-Group Wise Distributionfrom 1,26,797 crore as on 31/03/2005

?As on 31/03/2005, the nationalized to 2,84,750 crore as on 31/02/2009

banks retained maximum share of registering a CAGR of 17.56per cent.

37.45per cent in the total outstanding ?Average loan outstanding increased housing loans of all SCBs followed by

from 3.46 lakh to 4.99 lakh the SBI Group at 27per cent. As on registering a CAGR of 7.60per cent. 31/03/2009, both the nationalized

banks and SBI Group retained their ?A significant shift observed towards major shares as 38.68per cent and loan category of more than 10 lakh 25.60per cent respectively. Together, and above during the period 2005-Nationalized Banks and SBI Group 2009. As at end March 2009, such account for more than 64per cent of the accounts stood at 52.5per cent of the total outstanding housing loan total loan amount as against 35per cent portfolio as on 31/03/2009.as on March, 2005.

?The Nationalized Banks and the SBI ?Predominantly, the percentage of loan Group also dominate their share in accounts in the category 25,000- rural areas amongst the housing loan 2,00,000 have dominated the banks portfolio of all SCBs with around 36per portfolio during the period 2005-2009, cent each which has more or less however down from 44.83per cent as at remained at the same level during the end March 2005 to 34.86per cent as at period 2005-2009.end of March 2009.

Regional DistributionUrban –Rural

?As at end March 2009, the Southern ?The share of rural areas in housing region accounted for maximum share finance during the period 2005-2009, of 38.77per cent of the total outstanding has come down from 10.27per cent as housing loan of SCBs, followed by the in March 2005 to 7.13per cent in March Western region at 24.54per cent, 2009. Northern region at 18.07per cent,

?Share of semi-urban areas has declined Central region at 9.17per cent, Eastern from 15.21per cent as on 31/03/2005 to region at 8.21per cent and N-E region at 14.14per cent as on 31/03/2009.1.23per cent as against the figures of

?Share of urban areas has marginally 37.33per cent, 23.26per cent, 18.85per declined from 27.21per cent as on

` `

``

` `

`

`


145

cent, 10.36per cent, 8.80per cent and an increasing penetration of HFCs in the rural housing finance market. 1.40per cent respectively as at end

March 2005. ?The housing loans extended by HFCs in rural areas for up-gradation purposes ?During the period 2005-2009, there has are on rise indicating towards not been much variations in these conversion of Kutcha houses into Pucca regions over the period. houses.

Priority Sector Lending?The borrowings of HFCs registered a

?During the period 2005-09, the share of growth of approximately 32per cent over the period 2007-10. outstanding priority sector housing

loans in overall outstanding priority ?The borrowings of HFCs from NHB sector lending of SCBs noticed a increased from 1532 crore to 3518 continuous rise every year except the crore over 2007-10 thus registering a

growth of approximately 130per cent. year 2009 when it declined from 27per cent to 22per cent. ?Amongst the borrowing of HFCs from

NHB, the borrowings for rural housing ?In terms of share of outstanding housing sector registered a growth of about 323 loans under priority sector in overall per cent over the period 2007-10, outstanding gross bank credit of SCBs, whereas borrowings for urban housing

the same showed a fluctuating trend sector registered a growth of only 54 per

over the period 2005-09 i.e. it increased cent over the same period.from 8.63per cent in 2005 to 9.21per cent

XIX.4 Study on Affordable Housing and in 2006 before declining to 8.68per cent Housing Finance in the State of

in 2007. It further progressed to 9.04per Rajasthan

cent in 2008 and finally declined to XIX.4.1 At NHB's initiative as an outcome of 7.67per cent in 2009.

continuous dialogue with the State XIX.3 Study on Housing Finance Portfolio of Government of Rajasthan (in line with

Housing Finance Companies the State Affordable Housing Policy 2009 with focus on EWS & LIG Housing XIX.3.1 With an objective to capture the trend through private participation), in being followed by housing loan partnership with IFC under the overall portfolio of the Housing Finance program of the World Bank FIRST Companies over the period 2007-08 to initiative, it was agreed to undertake a 2009-10, a study on the same was study on the profile of affordable conducted by the National Housing housing supply and demand in select Bank during the year 2010-11. The cities and towns in the State of Rajasthan inputs to the study were taken from the (after discussions with the State information submitted by HFCs to NHB Government). These inputs were then to by way of various returns as regulatory be taken for examining the possibility of and supervisory compliance. The key establishing a specialized Housing findings of the Study are: Finance Institution in the private sector

?The outstanding housing loans of HFCs with focus on EWS & LIG segments.

witnessed a 40per cent growth over the XIX.4.2 While the State Governments' initiative period 2007-10;

of the Housing Policy promotes the ?Out of the total outstanding housing

supply of affordable housing for the loans of HFCs, the share of NHBs

EWS/LIG segments with private refinance outstanding increased from

participation, it was decided by the 4.11per cent in 2007-08 to 6.83per cent in

t h r e e p a r t n e r s n a m e l y N H B , 2009-10.

Government of Rajasthan and IFC to ?The share of housing loans extended by match the housing supply with

HFCs to individuals in rural areas necessary intervention on the demand showed an increasing trend over the side for providing housing finance for year 2007-08 to 2009-10, thus showing the EWS/LIG segments. For the

` `


146

purpose, it was decided to understand impact assessment of the scheme since the demand for affordable housing and its inception as also to look for housing finance in the state of possibility of expanding the potential Rajasthan in India so as to establish a o f RHF, a s tudy on “Impact standalone HFC for f inancing Assessment of Rural Housing Fund” 'affordable homes' in Rajasthan. In this was conducted by the Bank during the regard IFC along with NHB held year. several discussions with Government XIX.5.2 The Study captured the essential of Rajasthan (GoR) and all three parties parameters like the number of were of the view that a market beneficiaries and their socio-economic assessment study on the demand for profile, the geographical coverage of and supply of such units in the State the scheme across the length and needs to be undertaken to take strategic breadth of the country, performance decisions on investing in a housing assessment of the PLI's involved and f inance company focusing on NHB, the possibility of expanding the affordable homes in the state. outreach or improving the delivery

XIX.4.3 Accordingly, with financial assistance mechanism etc. The key findings of the received from the World Bank under Study are : the FIRST initiative and through the Box VINHB, the Business and Industrial Key Findings of the Study on Rural Research Division (BIRD) of IMRB Housing Fund (RHF)International was appointed for

Keeping in mind the severe housing conducting the study to achieve the

shortage in the country, the inception above objective.

of RHF Scheme is a step in the right XIX.4.4 The Study report has brought out direction.

issues with regard to both Supply and As far as institutional performance is

demand side of the housing & housing concerned, the HFC's have dominated

finance sector in the State of Rajasthan. in terms of disbursements made under

The Report also highlights the need for the Scheme. Disbursements made by

a HFC which would address the needs PLI's (HFC's & RRB's) have witnessed

of this market segment comprising of an increase during the year 2009-10

household earning in the range of over the year 2008-09. The role played

8,000- 25,000 per month. The by RRB's was smal l and the

suggestions for the working of such an performance of Co-operative sector

HFC in respect of its lending practices institutions was almost negligible.

and terms & conditions are also useful Hence, there is a strong need for

as also the need for improving the expanding the role of Co-operative

Policy Environment in the State with sector institutions under the Scheme.

specific reference to land availability & As far as regional performance is a c c e s s i b i l i t y , i n f r a s t r u c t u r e concerned, the Southern Zone has requirements etc. dominated in terms of disbursements.

XIX.4.5 Further discussions are on with the The performance of States like Andhra

State Government of Rajasthan Pradesh and Tamil Nadu has been

together with IFC for setting up a State encouraging.

level Housing Finance Company with Through a borrower profile analysis, it token participation from the State was determined that a significant part G o v e r n m e n t a n d s u b s t a n t i v e of the entire loan portfolio of the PLI's participation from other private sector (over 91per cent) was for financing new entities. construction activities. A majority of

XIX.5 Study on Impact Assessment of Rural the borrowers of these PLI's were in the

Housing Fundage bracket of 25-45. A majority of

XIX.5.1 The Rural Housing Fund (RHF) was borrowers from these PLI's (over 63per announced in the Union Budget 2008- cent) during the two years had an 09. To analyze the evaluation and income range in the bracket of 0-2

` `

`



147

lakh, which is an indication that the interventions in the informal sector as Scheme has the potential of reaching part of its promotional role in the sections that deserve it the most. context of EWS housing. The services

provided by Community Based As per the Qualitative assessment, Financial Institutions (CBFIs) as most PLIs have indicated that the

branches in their home State have financial and service intermediaries displayed the most encouraging assume great significance. The Bank results which could be due to the fact has recognised the penetration of these that PLIs usually have a strong presence institutions as delivery mechanisms in their home State or in the zone to for channelizing housing finance to the which their home State belongs.

unserved and the underserved at the PLI's have suggested various measures local and decentralized level . for increasing the outreach of the Accordingly, NHB has developed Scheme including some that are

suitable Housing Microfinance directed towards the Government/ Programmes to cater to the needs of NHB. PLI's have recommended that this section. The key findings of the the Government and NHB could Study have been enumerated earlier in undertake appropriate publicity the Report.campaigns for popularizing the

Scheme in the rural areas.

Besides, builders/developers should be encouraged to set up low cost housing in rural areas for generating

XX.1.1 NHB RESIDEX is an Initiative of the demand. PLI lending under the National Housing Bank to provide an Scheme has also been hindered by the Index of Residential Prices in India n o n - a v a i l a b i l i t y / d i f f i c u l t y i n across cities and over time. NHB obtaining land records and the absence

of clear/marketable titles. Hence, there launched RESIDEX for tracking prices is a need for the Government to take of residential properties in India, in steps towards streamlining and July 2007, covering data upto 2005 with computerizing land records. 2001 as the base year. The pilot study To conclude, the Rural Housing Fund covered 5 cities viz. Bangalore, Bhopal, Scheme, during its two years of Delhi, Kolkata and Mumbai. As a pilot operation, has displayed encouraging study, 5 cities were studied and results. However steps need to be thereafter NHB RESIDEX has been taken to expand its outreach and

expanded to ten more cities viz., ensure its holistic developmental Ahmedabad, Faridabad, Chennai, impact. The coverage of the Scheme Kochi, Hyderabad, Jaipur, Patna, has been uneven and there is a need for Lucknow, Pune and Surat. NHB modifying the existing norms under RESIDEX now covers 15 cities and has the Scheme so as to make it more

convenient to borrowers as well as been updated upto March, 2011 PLI's. For a holistic development of the (January – March). NHB RESIDEX is Scheme, there is a need for concerted now being updated on a quarterly efforts on the part of the authorities as basis with 2007 as the base year. well as PLI towards capacity-building

Box VIImeasures and establishing linkages Need, Scope and Coverage of NHB with institutions that have a strong

presence in the rural sector. RESIDEX

XIX.6 Study on the Impact Analysis of Need for NHB RESIDEXHousing Micro-Finance (HMF) Movement in prices of real estate Assistance to MFIs particularly residential housing is of

XIX.6.1 National Housing Bank (NHB) has vital importance to the macro economy been at the forefront of Housing as well as to various stakeholders Microfinance (HMF) initiatives by including the lender, borrowers and all giving financial assistance to MFIs in those who aspire to own a house. It has various parts of the country. NHB has acquired added importance in the light been gradually stepping up its of sustained increase in property

XX Residential Real Estate Price Indices (NHB RESIDEX)

XX.1 Background



148

prices, in the recent past. Besides, the property to be financed and also assess obvious wealth effect and its the adequacy of security cover on the implications on macro economy, outstanding loan. Observers can also housing prices have emerged as good identify the potential markets from the indicators of output, inflation, etc., movements of the NHB RESIDEX at which are useful inputs for developing the city level. Builders and developers regulatory and financial Policies. A may also benefit from the Index by broad representative housing price assessing the demand scenario in a index serves as a useful indicator for locality, and mapping the housing macroeconomic analysis. needs in different parts of the country.

NHB RESIDEX may be useful to Policy NHB RESIDEX seeks to track the makers, banks, housing finance movement in prices of residential companies, builders, developers, properties over a period of time by size investors and individuals.and location of dwelling units.

Granular information on movement of XX.2 NHB RESIDEX: Performance prices of residential properties XX.2.1 The movement in prices of residential (location wise, zone wise and city wise)

properties has shown an upward trend are relevant indicators for various in the 15 cities covered under NHB Policy formulations at the local and

State level. The complex nature of RESIDEX in July - September, 2010. markets for real estate is one of the Residential housing prices in 14 cities major challenges towards construction have shown an increasing trend in this of a representative price index for

quarter ended September, 2010 (July-residential properties in India. With

Sept, 2010) over the previous quarter heterogeneous attributes in terms of ended June, 2010 (April-June, 2010). qualitative and quantitative aspects

like locality, covered area, community They are Patna (19per cent), Kochi fac i l i t i es , indiv idual layouts , (18per cent), Chennai (15per cent), infrastructure, local demand and Faridabad (12per cent), Lucknow supply etc., captured in the RESIDEX,

(11per cent), Bhopal (9per cent), provides a widely representative Index Kolkata (9per cent), Bengaluru (8per based on a set of correlated factors.cent), Ahmedabad (8per cent), Scope and Coverage of the IndexHyderabad (7per cent), Pune (4per NHB RESIDEX tracks housing prices in

the selected 15 cities and covers cent), Mumbai (4per cent), Delhi (4per residential properties in different cent) and Jaipur (3per cent). Patna parts/locations of the cities. The (19per cent) has shown the maximum Initiative, as it evolves, will seek to

increase followed by Kochi (18per cent) bring greater transparency in the

and Chennai (15per cent) respectively. property market. There is 1 (one) city, viz. Surat (-6per Uses of NHB RESIDEXcent) which has shown correction in The index will also aid home buyers in prices over the previous quarter.their decisions by enabling comparison

between cities, between localities in the XX.2.2 The movement in prices of residential same city and comparison of a price

properties has shown an upward trend rise in a particular city and localities

in the 15 cities covered under NHB over t ime. One of the major RESIDEX in October – December, 2010. considerations in housing finance is

the proper assessment of the value of Residential housing prices in 13 cities property being financed. This have shown an increasing trend in this information has a critical bearing on quarter ended December, 2010 (Oct-the credit evaluation and assessment of

Dec, 2010) over the previous quarter the quality of the security against the ended September, 2010 (July-Sept, loan. NHB RESIDEX can be a useful

indicator for estimating the value of 2010). They are Bengaluru (36per cent),


149

Ahmedabad (16per cent), Kolkata in this quarter ended March, 2011 (Jan-

(11per cent), Jaipur (10per cent), Delhi Mar, 2011) over the previous quarter

(8per cent), Bhopal (4per cent), ended December, 2010 (Oct - Dec,

Mumbai (4per cent), Faridabad (3per 2010). These cities are Pune (5.02per

cent), Kochi (3per cent), Lucknow cent), Lucknow (3.09per cent) and

(3per cent), Surat (3per cent), Chennai Delhi (2.64per cent). The city which has

(2per cent) and Pune (1per cent). shown the maximum increase is Pune

Bengaluru (36per cent) has shown the (5.02per cent) followed by Lucknow

maximum increase followed by (3.09per cent) and Delhi (2.64per cent)

Ahmedabad (16per cent) and Kolkata respectively. There are 7 cities which

(11per cent) respectively. There are 2 have shown correction in prices over

cities which have shown correction in the previous quarter and they are

prices over the previous quarter and Bengaluru (- 17.6per cent), Kochi (-

they are Hyderabad (-1per cent) and 14.92per cent), Faridabad (- 6.37per

Patna (-1per cent). Prices have nearly cent), Hyderabad (- 4.6per cent), Surat

been the same in 3 cities showing +/- (- 3.76per cent), Bhopal (- 3.55per cent)

1per cent change in prices and they are and Jaipur (- 2.63per cent). Prices have

Pune (1per cent), Hyderabad (-1per nearly been the same in 5 cities

cent) and Patna (-1per cent). showing +/- 1per cent change in prices

and they are Kolkata (- 0.77per cent), XX.2.3 The movement in prices of residential Ahmedabad (0.4per cent), Chennai properties has shown mixed trend in (1.66per cent), Mumbai (1.39per cent) the 15 cities covered under NHB and Patna.RESIDEX in January - March, 2011

quarter. Residential housing prices in 3

cities have shown an increasing trend

Table VII: NHB Residex-Percentage (per cent) change in different cities: City-wise growth rate over the previous quarter

Cities July – September quarter October – December quarter January – March quarter

over April – June quarter over September quarter over October – December quarter

Hyderabad 6.51 -0.64 -4.60

Faridabad 11.58 3.49 -6.37

Patna 19.23 -1.15 0.00

Ahmedabad 7.71 16.47 0.40

Chennai 14.66 2.18 1.66

Jaipur 3.40 9.60 -2.63

Lucknow 11.35 2.70 3.09

Pune 3.61 1.31 5.02

Surat -5.67 3.36 -3.76

Kochi 18.04 3.27 -14.92

Bhopal 8.96 4.30 -3.55

Kolkata 8.67 11.24 -0.77

Mumbai 4.33 3.59 1.39

Bengaluru 8.46 35.78 -17.60

Delhi 4.22 7.70 2.64


150

Table VIII: NHB Residex: City-wise Housing Price Index (Base Year: 2007 = 100)

Cities

Hyderabad 100 96 92 65 81 81 82 87 87 83

Faridabad 100 100 121 139 145 154 152 170 176 165

Patna 100 103 100 107 119 127 124 148 146 146

Ahmedabad 100 106 100 127 128 113 131 141 164 165

Chennai 100 104 95 120 143 164 183 210 214 218

Jaipur 100 119 115 71 63 66 61 63 69 67

Lucknow 100 103 102 104 119 112 133 148 152 157

Pune 100 101 97 103 117 124 135 140 141 148

Surat 100 101 98 111 123 109 136 128 133 128

Kochi 100 106 95 90 83 79 83 97 101 86

Bhopal 100 139 151 139 162 158 153 166 173 167

Kolkata 100 114 140 162 185 165 176 191 213 211

Mumbai 100 112 117 124 126 134 160 167 173 175

Bengaluru 100 73 76 58 59 64 68 74 101 88

Delhi 100 124 130 121 113 106 110 115 123 126

2007 Index

Jan-June 2008 Index

Jan-June 2008 Index

July- Dec 2008 Index

Jan-June 2009 Index

July-Dec 2009 Index

Jan-Mar 2010 Index

Apr-Jun 2010 Index

Oct-Dec 2010 Index

Jan-Mar 2011 Index

CITY -WISE HOUSING PRICE INDEX

Chart VI: NHB Residex: City-wise Housing Price Index


151

XXI Interest Subsidy Scheme for Housing

the Urban Poor (ISHUP)

Bank, Syndicate Bank, Punjab National

Bank, Central Bank of India, Union

Bank of India, Bank of Baroda, XXI.1 BackgroundAllahabad Bank, State Bank of Mysore,

XXI.1.1 The Government of India approved the Andhra Bank, Canara Bank, State Bank

Interest Subsidy Scheme for Housing of Hyderabad, United Bank of India,

the Urban Poor (ISHUP) on December Indian Overseas Bank, Bank of India

26, 2008. The Ministry of Housing & and IDBI Bank Ltd. among the Public

Urban Poverty Alleviation (MHUPA) Sector Banks and ICICI Bank and Axis

finalised the operative guidelines for Bank among Private Sector Banks and

implementation of the Scheme and the U t t a r B i h a r G r a m i n B a n k

Scheme became operational thereafter. (CBI),Karnataka Vikas Grameen Bank

The Scheme is expected to leverage (Syndicate Bank), Pragathi Gramin

flow of institutional finance for the Bank (Canara Bank), Uttarbanga

EWS and LIG segment households and Kshetriya Gramin Bank (CBI), Cauvery

also intends to create an additional Kalpatharu Grameena Bank (SBM) and

housing stock of 3.10 lakh houses for Housing Development Finance

these segments over the next four years Corporation Ltd (HDFC Ltd.),

(2008-12). An allocation of 1, 100 Housing & Urban Development

crore has been provided for this Corporation Ltd (HUDCO), Dewan

Scheme. The Scheme will be in Housing Finance Corporat ion

operation till 2012. Ltd.(DHFL), LIC Housing Finance

XXI.1.2 The loan repayment periods generally Ltd., Can Fin Homes Ltd., and DHFL permissible range from 15-20 years. Vysya Housing Finance Ltd., amongst The interest subsidy at 5 per cent per the Housing Finance Companies. annum for EWS and LIG segments

XXI.2.2 At the behest of MHUPA, NHB would be admissible for loan upto 1

organised a review meeting on lakh over the full period of the loan.

December 16, 2010 with select SLBC The Scheme is being implemented

Convenors and officials from Banks / through Banks and select Housing

HFCs for discussing the various Finance Companies. NHB and

modalities in the implementation and HUDCO are the Central Nodal

for suggesting the alternate measures Agencies for the administration of

which could address the issues relating interest subsidy and monitoring the

to the implementation. progress under the Scheme.

XXI.2.3 Till June 30, 2011, NHB received 190 XXI.2 Subsequent Developments

interest subsidy claims from PLIs XXI.2.1 NHB as a Central Nodal Agency has claiming 5.11 crore as Net Present

s i g n e d M e m o r a n d u m o f Value (NPV) of interest subsidy Understanding (MoU) with 33 primary covering 6201 beneficiaries, of which, lending institutions (PLIs) consisting 168 claims amounting to 4.32 crore of 20 Public Sector Banks, 2 Private were sanctioned / disbursed by NHB Sector Banks, 5 Regional Rural Banks to various PLIs towards 5662 and 6 Housing Finance companies. beneficiaries.NHB has signed MoU with State Bank

XXII 1per cent Interest Subvention Schemeof India, Oriental Bank of Commerce,

XXII.1 In order to stimulate demand for credit United Commercial Bank, Corporation for housing in the lower & middle Bank, Indian Bank, Punjab & Sind

`

`

`

`


152

income segment of population in the people at right time, records of the

country Government of India meetings of the Board and other

introduced interest subvention of 1% Directors' Committee have been

for one year on all individual housing digitized and updated regularly.

loans upto 10 lakh, provided the cost Further, the compliance with all the

of the unit does not exceed 20 lakh statutory requirements is ensured by

from 1st October, 2009 to 30th the Bank.

September, 2010. Further in the budget XXIII.2 The endeavour of the Bank is to for FY 2010-11 the Scheme was provide up-to-date status to its extended up to March 31, 2011. Scheme stakeholders through its dynamic was further extended for FY 2011-12 website with easier and speedier access with increase in limit of housing loans and downloads. The Bank's website upto 15 lakh and cost of house upto contains all the information about its 25 lakh from 10 lakh & 20 lakh activities/functions, products, new

respectively in earlier years. The initiatives, organization, etc. Various Scheme recognizes that cut in interest information on Bank's Financial rates has an important role to play in Support, Information for Housing reducing EMIs of borrowers & creating Finance Companies (HFCs) and their additional demand for housing. All depositors, Research & Development regions of the States & Union Reports, Publications, etc. are also Territories in the country, including available at the website for Housing rural & urban areas will be covered Finance Institutions and public at under the Scheme. large . Downloadable , inc lude

The Reserve Bank of India (RBI) and applications forms (i) for companies

National Housing Bank (NHB) are the desirous to register with Bank and/or

nodal agencies for Scheduled seek financial support – equity or

Commercial Banks and Housing finance for their operations, (ii) for

F i n a n c e C o m p a n i e s ( H F C s ) , investors desirous to invest in Bank's

respectively. The Scheme is being deposit schemes, etc.

implemented through 24 HFCs XXIII.3 Composition of the Board and its registered with NHB as central nodal Committeesagency. As on 30th June, 2011 NHB has

XXIII.3.1 The general superintendence, direction received claims totaling to 55.74 crore

and management of the affairs of the from 20 HFCs out of which claims

business of the Bank are vested in the totaling to 17.32 crore has been

Board of Directors, which acts on released by Government to NHB and

business principles with due regard to the same has been disbursed to HFCs.

public interest. The Board of Directors

has been constituted in accordance

XXIII.1 The Bank is committed to follow the with the provisions of the National

best practices on corporate governance Housing Bank Act, 1987 (Central Act

and has emphasised on the cardinal No. 53 of 1987). The Board is headed by

values of fairness, transparency and the Chairman and Managing Director,

accountability for performance at all who is appointed under Section 6 (1) (a)

levels in dealing with its stakeholders. of the Act; with eleven other Directors

Towards this end, to ensure that the appointed or nominated as per the

right information is accessible to right provisions of Section 6 (1) (b) to (f) of

`

`

`

` ` `

`

`

XXIII Corporate Governance


153

the Act. The composition of eleven Smt. Nilam Sawhney, IAS and Shri

Directors includes four Independent Ashok Dongre, IAS.

Directors, two nominated by Reserve XXIII.4 Annual Financial Inspection for the Bank of India, three amongst the Year ended June 2010officials of the Central Government,

The Reserve bank of India (RBI) and two amongst the officials of the conducted the Annual Financial State Government.inspection of the Bank under Section 45

XXIII.3.2 The Board has constituted three N of the RBI Act 1934 with reference to Committees, viz., (a) Executive its position as on June 30, 2010. Committee of Directors [EC], (b) Audit

The compliance has been submitted to Committee of the Board [ACB] and (c) the RBI after getting the same Remuneration Committee of Directors approved by the Audit Committee of [RC] to enable better and focused Board. attention on the affairs of the Bank.

XXIII.5 AuditorsThe functions of the EC, ACB and RC

are well-defined and the Board has XXIII.5.1 Statutory Auditdelegated certain powers to these

The accounts of the Bank for the Committees. The Board/Committee

financial year 2010-11 were audited by meetings are held at regular intervals.

M/s. Aiyar and Co., Chartered XXIII.3.3 During the year 2010-11, the Board, the Accountants, New Delhi who were

Executive Committee of the Board and appointed as the Statutory Auditors of Audit Committee of the Board each the Bank for the year 2010-11 by the met six times. Reserve Bank of India. The report of the

Auditors is given in the Annual XXIII.3.4 The following changes have taken Accounts section of this Report. place in the Board of Directors of the

Bank: XXIII.5.2 Internal and Concurrent Audit

i. Shri R. V. Verma, Chairman & The Internal Audit functions of the Managing Director, National Bank for the year 2010-11 were Housing Bank with effect from 15- outsourced to a firm of Chartered 09-2010 in place of Shri S. Sridhar; Accountants, M/s S. P. Chopra and

Co., New Delhi. Concurrent Audit of ii. Shri Sanjay Kumar Rakesh, IAS, Treasury Operations and day-to-day Joint Secretary to Government of operations of accounts were also I n d i a , M i n i s t r y o f R u r a l outsourced to a reputed firm of Development with effect from 22-Chartered Accountants, M/s K. S. 09-2010 in place of Smt. Nilam Kohli, New Delhi. Sawhney, IAS; and

iii. Shri K. Phanindra Reddy, IAS,

Secretary to Government of Tamil XXIV.1 Staff Strength & Recruitment and N a d u , H o u s i n g & U r b a n PromotionsDevelopment Department with

XXIV.1.1 The total staff strength of the Bank, as effect from 21-05-2011 in place of

on 30th June, 2011, stood at 87 Shri Ashok Dongre, IAS.

including CMD and 5 Management XXIII.3.5 The Board placed on record its deep Trainees as against 89 at the close of

a p p r e c i a t i o n t o t h e v a l u a b l e previous year. The Bank has recruited 5 contributions made by Shri S. Sridhar, Management Trainees (in Scale I) from

XXIV Human Resources


154

ICWAI. Besides this, 6 officers CBI Academy, FICCI, ASSOCHAM,

including 2 Advisors are also engaged AIMA, Dun & Bradstreet etc.

in the Bank's service on contract basis. XXIV.2.2 An in-house training programme on During the year, 7 officers were “Enhancing Managerial Effectiveness“ relieved from the services of the Bank was conducted on 29-30 April, 2011 at which includes 1 Assistant Manager, 3 NHB, New Delhi. To address the Deputy Managers, 1 Manager, 1 Programme, faculty members from Assistant General Manager and 1 IILM Institute of Higher Education,

Gurgaon were invited. In all, a total of

36 officers attended the programme.

XXIV.3 Business Review Conference for

officers of the Bank

XXIV.3.1 A Budget-cum-Business Review

Conference of Senior Officers was held

on November 27, 2010 at India

International Centre. All officers in the

level of RM and above, including RMs

p o s t e d i n R O s a t t e n d e d t h e General Manager on account of Conference.voluntary retirement /resignation.

During this period 4 officers in XXIV.3 .2 Budget -cum-Business Review

RM/Scale IV were promoted to Conference for Officers of Junior &

AGM/Scale V, 5 officers in Mgr/Scale Middle Management (including MTs)

III were promoted to RM/Scale IV and was held on 24-25 June, 2011 at TERI

3 officers in DM/Scale II were Retreat, Gurgaon. All the officers in the

promoted to Mgr/Scale III. level of AM, DM, MGRs & MTs,

including those posted in ROs XXIV.2 Trainingattended the Conference.

XXIV.2.1 To upgrade skills and enhance XXIV.4 Mentor Schemeproficiency, the Bank deputed its

officers to various training and XXIV.4.1 The Bank has introduced a “Mentor

m a n a g e m e n t d e v e l o p m e n t Scheme” to help the new officers fit

programmes besides organizing in- well into the Bank by quickly

house programmes. During the year, developing a good understanding of

90 officers attended various training its functioning, vision & goals. The

programmes. This includes 10 officers Scheme has now been extended to the

w h o a t t e n d e d i n t e r n a t i o n a l Management Trainees on the same

programmes and 80 officers attended lines as it was applicable to the officers

national level programmes from senior in Scale I & Scale II.

to middle management and below. The

o f f i c e r s w e r e n o m i n a t e d t o XXV.1 National Housing Bank is always programmes at national level institutes

committed towards the successful and such as National Institute of Bank effective implementation of official Management (NIBM), Indian Institute language policy of the Government of of Management (IIM), Indian Banks India and has implemented relevant Association (IBA), XLRI Jamshedpur and effective measures for the College of Agricultural Banking (CAB), progressive use of Hindi language in

XXV Rajbhasha

Shri R.V. Verma, CMDaddressing the participants at Wharton School


155

work. The regular (once in a quarter)

m e e t i n g s a r e h e l d b y t h e

Intradepartmental Official Language

Implementation Committee in which

the analysis of the progressive use of

the official language in Head Office

along with the regional office at

Mumbai and in all other representative

offices is monitored.

XXV.6 During the year, an officer of the the Bank. Regional Implementation Office of the

Department of Official Language, XXV.2 Bank complies with the provisions of Ministry of Home Affairs visited Head monitoring work relating to issuing Office of the Bank for inspection and replies in Hindi for the Hindi/ bi-analysing the progressive use of Hindi. l ingual le t ters rece ived f rom The Official Language Inspector Government of India, issuance of the appreciated work of Hindi in the Bank.bi-lingual documents under Section

(3), publishing reports and Bank's XXV.7 The website of the Bank has been publications in bi-l ingual etc. provided in Unicode Font as per the Workshops are also organized directions of the Official Language regularly to enhance the usage of Department of the Ministry of Home Hindi. 'Aaj ka Shabd' (Today's word) is Affairs. Delhi Nagar Rajbhasha written in Hindi/English at the Notice Karyanvyan Samiti (Official Language Board of the Bank which is also sent Implementation Committee of Delhi through internal e-mail to all the City) has started a joint website along Officers of the Bank. with all the member of banks in which

National Housing Bank also holds a XXV.3 'Hindi Chetna Maas' is celebrated to Web Page. Various activities of the promote the use of Hindi in routine Bank have been displayed therein.work of the Bank. Seven competitions

were organised the year 2010-11 XXV.8 The write-ups of Bank's officers are also during the Chetna Maas held from published in the Hindi magazine August 15, 2010 to September 14, 2010 named, "Bank Bharti" published by the in which a large number of Bank's Delhi Nagar Rajbhasha Karyanvyan officers participated with great zeal. Samiti. D u r i n g C h e t n a M a a s , H i n d i

XXV.9 The quarter ly Hindi in-house Documentary film 'Pipli Live' was

magazine ""Awas Bharti"" has also shown.

been enriched in its content as also in XXV.4 To encourage use of Hindi within the presentation. The magazine has

Bank, the Bank introduced a quarterly received Third Prize for the Year 2009-Hindi competition on various aspects 10 from Delhi Bank Nagar Rajbhasha viz writing/reading etc. Three prizes Karyanvyan Samiti. Along with this, are given under each competition to the Bank's magazine has received the winners. Fourth Prize in the Year 2007-08, 2008-

09 & 2009-10 in the Rahbhasha Griha XXV.5 Various encouragement plans have Patrika (Official Language Domestic been started from time-to-time to Magazine) competition organized by promote the use of Hindi in official

Dr. D. Subbarao, Governor, Reserve Bank of India handing over Rajbhasha Prize to Shri R.V. Verma,

CMD, NHB on June 1, 2011


156

the Reserve Bank of India at All India Housing Finance Scheme, a market

level. based Scheme and Rural Housing

XXVI.1 In a time when knowledge has become

the key economic resource and the

dominant and perhaps even the only

source of comparative advantage, the

Knowledge Centre is acting as the

main learning resource centre of the

Bank by providing current and

updated information to all its officers

and enabling them to perform their day Fund, a subsidy based Scheme for the

to day task of decision making.weaker sections have expanded the

XXVI.2 The core collection of Knowledge scope of rural housing credit in the Centre contains subjects such as country and have resulted in improved architecture, housing, economics, institutional depth in providing banking, fiction, literature, poetry etc housing credit delivery in rural areas. in printed and non printed form along They have demonstrated the viability with 50 foreign and Indian print/e- and sustainability of rural housing journals related to finance, housing, finance and in a more tangible manner economics, management and other have resulted in construction and technical/ non technical subjects. All improvement of rural housing stock.the functions of knowledge centre are

XXVII.1.2 The award was presented by Dr. K. C. managed through library automation

Chakrabarty, Deputy Governor, software LIBSYS, thus making it a fully

Reserve Bank of India in the presence automated library. The tools which are

of Dr. C. Rangarajan, Chairman, Prime used by Knowledge Centre for

Minister's Economic Advisory Council classification of printed and non

and other distinguished guests to Shri printed material are 22nd edition of

R. V. Verma, CMD, NHB and his team Dewey decimal classification, Library

during the Financial Inclusion Day of Congress subject heading list and

Celebrations held on January 5, 2011 at Cutter's author table. Knowledge

New Delhi. The Award ceremony was Centre has extended membership of

preceded by a Banker's Conclave on some leading libraries such as

Financial Inclusion wherein Shri R.V. American Information Centre and

Verma highlighted the synergy British Council Library to officers.

between inclusionary housing and

financial inclusion besides stressing

NHB's renewed emphasis on low & XXVII.1 SKOCH Award for Financial moderate income and rural housing.Inclusion 2011 for role in Rural

Housing XXVII.2 ADFIAP Award for Development

Finance-led Poverty Alleviation 2011 XXVII.1.1 The SKOCH award for Financial for Rural Housing FinanceInclusion 2011 was conferred on

National Housing Bank for rural XXVII.2.1 The Association of Development housing. The two dedicated Schemes Financing Institutions in Asia and the of NHB viz. Golden Jubilee Rural Pacific (ADFIAP) award for the year

XXVI. Knowledge Centre

XXVII. Awards and Recognitions

NHB conferred Financial Inclusion Award for Rural Housing Finance, January 05, 2011


157

2011 was conferred on NHB under the experienced similar expansion in their

category Development Finance-led housing loan business. A supportive

Poverty Alleviation. The award was tax regime by way of fiscal incentives

given to NHB for its role in Rural and an enabling regulatory (financial

Housing Finance through its two sector) framework until about 2006-07

successful schemes viz. Golden Jubilee has led to sustained increase in

Rural Housing Finance Scheme and demand for housing loans. The

Rural Housing Fund. borrowers of housing loans have

definite preferences for tax savings for

housing loan repayments,(principal XXVIII.1 The housing sector in India historically and interest) which are provided under

had significant gaps in terms of credit the existing taxation laws. For the flow and market infrastructure. The lending agencies, the banks and the market reforms and liberalization housing finance companies, tax through the 1990's contributed shelters can be a huge incentive for substantially to the productivity and their continued expansion in their efficiency of this sector in terms of lending for housing.The regulatory credit flow and its absorption in the regime governing the housing finance market. The supply responses, business has ensured stability and however have not been so smooth, and sustainability of the system and its responsive to the growth in demand. growing depth.While the demand has grown through

XXVIII.3 Rental housing policy at the State level increased supply of credit, the supply-will need to be placed on the larger side rigidities have limited the scope urban policy agenda. An enabling and efficacy of funding. As a result, rental housing Policy at the State level smooth integration of the financial and its implementation will also go a market with the “real” economy was a long way in addressing the housing challenge when the reforms began.problem of the migrant population.

XXVIII.2 Experience over the last decade or so Little work has been done in this field, has been very encouraging and the which has huge potential to improve inves tments in hous ing have the housing supply scenario. registered a compounded annual

XXVIII.4 While the future growth outlook of the growth rate (CAGR) of nearly 28-30%, housing market looks promising, as despite recession in different segments the sector will become increasingly of the economy from time to time. The demand driven, the challenge lies in commercial banks who are now the making it more inclusive. The major players in the financial market, urbanization scenario can easily begin have stepped up their housing loan to look daunting and will need advances significantly over the years proactive intervention. By 2030 it is achieving an annual growth of nearly estimated that 600 million of India's 25%. The growth in their housing loan population will be living in India's portfolios is largely demand-driven. cities. Infrastructure gaps in cities Similarly, the specialized Housing particularly in respect of sanitation and Finance Companies (HFCs) also housing are serious challenges that will continue to be significant players in need to be addressed through t h i s m a r k e t . T h e y h a v e a l s o appropriate, pro-active and actionable

XXVIII Future Outlook


158

P o l i c i e s t h r o u g h s u p p l y - s i d e and assets, and break the vicious cycle

intervention. of poverty.

XXVIII.5 Factors such as rapid increase in land XXVIII.8 Micro-mortgages, with loan size

prices, inadequate infrastructure, ranging from 3-10 lakh and targeted

absence of long-term debt market and at low-income customers, can act as an

long-term loans for borrowers at important vehicle for advancing

reasonable fixed rates, limited financial inclusion, one that is based on

developer finance and lack of access to customer needs and operates through

housing finance for low-income rural the regulated financial market.

and informal group borrowers are Potentially, Micromortgage lending

some of the constraints for affordable and construction industry could play a

housing on the demand side. The transformative role in promoting the

markets need balanced funding financial inclusion of millions of low-

models and a diversified toolbox to income households. In order to

cater to the different market segments. promote financial sector participation

R i s k m i t i g a t i o n i n f i n a n c i n g in low income housing market,

individuals as also in financing the initiatives for bankable schemes are

projects undertaken by developers being explored, though the lenders

/builders (particularly for low and and the regulators alike are adopting a

moderate income housing) will need to cautious approach. Risk mitigating

be explored through special purpose instruments can play an important role

entities, and through incentive-based in overall confidence-building. These

approach. may range from savings-linked loans,

mortgage guarantee, government-XXVIII.6 Sound and prudential regulations for guaranteed funds, capital/interest housing finance, innovative housing subsidy product, credit information finance products, and increased bureaus, micro-mortgage lending mortgage affordability will contribute l inked to f inancia l inc lusion, to an expanded market for housing and Government - sponsored c red i t housing finance. With rapid growth enhancement etc. As his segment witnessed in the primary mortgage continues to grow, they need to be markets over the last 4-5 years, the served through measures of financial development and growth of the inclusion and inclusionary housing. secondary mortgage market has However, they will need to be become imminent and NHB expects to protected/hedged against the inbuilt play a lead role in this initiative.uncertainties and volatilities in the

XXVIII.7 Financial inclusion of the excluded financial and the housing market. On

(largely poor and low-income groups) the supply side, incentive-based

has been identified by policymakers, construction by the private sector

and development organizations as an and/or suitable public-private

important pillar to achieve the partnership vehicle with risk-

Millennium Development Goals mitigation provisions will need to be

(MDGs) of reducing poverty and explored and supported.

improving livelihoods. Participation XXVIII.9 The low income market can be served in formal financial sector is seen as

efficiently and sustainably, through crucial for the poor to build savings the combined support of the financial

`


159

sector institutions and the real sector counterparts are getting increasingly

policy makers dealing with land and engaged on the issues related to

infrastructure, tax, stamp duty and housing for the low income people.

subsidies, approvals etc. . The central With the weaknesses in the system

government through the Ministry of well recognized, all the stakeholders -

H o u s i n g a n d U r b a n P o v e r t y in the financial and the real sector - will

alleviation and the state governments, need to jointly advance the cause of

togetherwith their private sector affordable housing.

Farewell to Ms Shyamala Gopinath, Deputy Governor, Reserve Bank of India

*****

ANNUAL ACCOUNTS2010-11

(JULY, 2010 TO JUNE, 2011)

NATIONAL HOUSING BANK

162


We have audited the attached Balance Sheet of We further report thatthNational Housing Bank as at 30 June, 2011 and the 1. We are unable to form an opinion on the

Profit and Loss Account annexed thereto for the treatment given by the Bank in respect of year ended on that date. These financial statements the following matters and the impact that are the responsibility of the Bank's management. the same may have on the accounts of the Our responsibility is to express an opinion on these Bank as the final decisions have yet to be financial statements based on our audit. delivered by the Courts and the sums We conducted our audit in accordance with determined.auditing standards generally accepted in India. a) `237.06 Crores received from State Bank of Those Standards require that we plan and perform Saurashtra, since amalgamated with State the audit to obtain reasonable assurance about Bank of India pursuant to a decree by the Special whether the financial statements are free of Court and others and included in 'Other material misstatement. An audit includes Liabilities'[Note No.18.1].examining, on a test basis, evidence supporting the

b) `149.37 Crores appearing as 'Other Assets' amounts and disclosures in the financial representing `95.40 Crores paid by the Bank to statements. An audit also includes assessing the State Bank of Saurashtra since amalgamated accounting principles used and significant with State Bank of India and ̀ 53.97 Crores paid estimates made by management, as well as by the Bank to Custodians pursuant to the evaluating the overall financial statement orders of the Special Court [Note No.18.2].presentation. We believe that our audit provides a

reasonable basis for our opinion. 2. Provision in the accounts has not been made for the disputed Income Tax Liability for We report as follows:the assessment year 2003-04 to 2008-09

a) The Balance Sheet and Profit and Loss amounting to `66.75 Crores arising from re-Account have been drawn up in assessment of earlier years completed during accordance with the National Housing the year (refer note 21.3), disallowing the Bank Act, 1987 and regulations framed deduction claimed by the bank in respect of there under for General Fund and special reserve created and maintained under for Special Fund in accordance with section 36(1) (viii) of the Income Tax Act, 1961.the provisions of National Housing

Based on the legal opinion obtained, the Bank (Slum Improvement and Low Cost management is of the view that the claim of the Housing Fund) Regulations, 1993.Bank under section 36(1)(viii) of the Income

b) In our opinion, proper books of account as Tax for which appeals are pending before required by law have been kept by the Bank authorities may be decided in Bank's favour and so far as appear from our examinations of the deduction shall be allowed. On the said those books. assumption Bank has created deferred tax

liability (DTL) of `66.75 Crores, considering c) The Balance Sheet and Profit and Loss the timing difference, instead of provision for Account dealt with by this report are in income tax.agreement with books of account.

In our opinion till the appeals are decided in d) Where we have called for information and favour of the bank regarding deduction of explanations, such information and special reserve under sections 36(1) (viii), no explanations have been given to us and we timing differences arise on the said account as have found them to be satisfactory.

AIYAR & CO.CHARTERED ACCOUNTANTS

607, AKASH DEEP26-A, BARAKHAMBA ROAD

NEW DEHI - 110 001PHONE :23313807,23316117

23316125, FAX : 23310281e-mail : [email protected]

[email protected]

163


per Accounting Policy of the Bank and as 11 - The Effects of Changes in Foreign envisaged by Accounting Standards 22- Exchange Rate issued by The Institute of Accounting for taxes on Income issued by The Chartered Accountants of India, the Bank Institute of Chartered Accountants of India on as on the reporting date has revalued its the reporting date since the accounting income Foreign Exchange borrowings from and taxable income as determined and USAID and interest payable there on. This computed by the revenue for the above has resulted in increase in liability to the assessment years for arriving at the taxable extent of `31.14 Crores with consequent income, the deduction claimed for special effect on amount recoverable from reserve has not been allowed and as such as at Government of India (GOI). The said the reporting date is not capable of reversal in re-valuation has no effect on the profit of subsequent periods. This has resulted in the Bank, (Refer par 14.1).deferred tax liability being overstated to the 5. Further subject to our comments in para 1 to extent of `66.75 Crores with consequent effect 4 above, in our opinion and to the best of on carrying amount of advance tax / provision our information and according to the for tax. However the same has no effect on the explanations given to us and as shown by profit of the Bank. the books of the Bank the said accounts

read together with the notes thereon, give 3. In regard to provision for taxation the bank the information required by the National

during the year reviewed it policy on provision Housing Bank Act, 1987 and regulations for taxation and has uniformly provided framed there under for General Fund and deferred tax liability (DTL) in regard to the for Special Fund in accordance with the

provisions of National Housing Bank special reserve under section 36(1)(viii) of the (Slum Improvement and Low Cost Income Tax Act, as against earlier years Housing Fund) Regulations, 1993 in the

practice of creating DTL in some of the year and manner so required and in conformity with

in other providing for the tax liability. the accounting principles general accepted However, for the assessment year 2009-10 both in India, in the case of:income tax and DTL have been created in i) The Balance Sheet of the Bank read together respect of special reserve under section with notes thereon & Significant

Accounting policies, is a full fair Balance 36(1)(viii) of the Income Tax Act, resulting in Sheet containing all the necessary the profit for year being under stated to the particulars and is properly drawn up so as extent of `3.83 Crores (refer note 21.4) with to exhibit a true and fair view of the affairs of

thconsequent effect on carrying amounts of the Bank as at 30 June 2011; andadvance tax / provision for tax and the reserves

ii) The Profit and Loss Account read together in the Balance sheets. with notes thereon & Significant Accounting

Policies shows a true balance of profit of the 4. In compliance with Accounting Standard Bank for the year ended on that date.

For AIYAR & CO.Chartered Accountants

Firm Regn. No.001174N

C.CHUTTANI Partner

Membership No.090723

Place: New Delhi

Date: 6 Sep 2011

8


164



Previous Year in Crore `

450.002,072.41

0.008,351.814,375.756,457.21

82.30667.15272.49

2.79

22,731.91

Liabilities

1. Capital2. Reserves3. Profit and Loss Account4. Bonds and Debentures5. Deposits 6. Borrowings7. Deferred Tax Liability (net)8. Current Liabilities and Provisions9. Other Liabilities10. HLA deposits with banks and HFCs - as per contra

TOTAL

Schedules

IIIIIIIVVVI

VIIVIII

Current Year ` in Crore

450.002,351.72

0.00 9,766.866,026.816,058.34

91.79760.68272.49

2.07

25,780.76

Balance Sheet

K. N. KumbhareRegional Manager

R.K. PandeyGeneral Manager

Arnab RoyExecutive Director


Vidyadhar K. Pathak Errol D'Souza Jayshree A. Vyas H.R. Khan

Lakshmi Chand Arun Kumar Misra Alok Nigam Sanjay K. Rakesh

Directors

New Delhi, September 6, 2011

165


as at 30th June, 2011


1,789.02858.15

19,836.6619.41

225.882.79

Assets

1. Cash and Bank Balances2. Investments3. Loans and Advances4. Fixed Assets5. Other Assets6. HLA deposits with banks and HFCs - as per contra

Schedules

IX

XXIXIIXIII

Current Year in Crore`

2,117.60764.61

22,581.45

20.31294.72

2.07

TOTAL22,731.91 25,780.76

78.88 Contingent Liability XIV 130.52

Notes forming part of Accounts XV

As per our attached Report of even date

For Aiyar & Co.Chartered Accountants

Firm Regn. No. 001174N

(C. Chuttani) Partner

Membership No. 90723

166




1,051.688.670.150.081.740.371.82

0.470.262.20

16.616.320.977.470.000.317.511.920.000.00

22.00

0.075.790.00

136.00280.25

1,552.666.59

26.00

2.80235.13

9.73280.25

Expenditure

1. Interest on Borrowings and Deposits2. Staff Salaries, Allowances and Terminal Benefits 3. Directors' and Committee Members Fees and Expenses4. Audit Fees 5. Rent, Taxes, Electricity and Insurance6. Postage, Telegrams, Telex and Telephones7. Law Charges8. Printing, Stationery and Advertisement (i) Printing and Stationery 0.34 (ii) Advertisement 0.419. Depreciation10. Brokerage, Guarantee Fee and Other Expenditure on Borrowings 11. Stamp duty on Borrowings12. Travelling Expenses 13. Other Expenditure 14. Write offs15. Amortization on Investment 16. Loss on Shifting of Securities17. Loss on Revaluation of Foreign Deposits and Borrowings18. Provision for Diminution in the Fair Value of Restructured Accounts19. Provision for Standard Assets20. Provision for Bad and Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act,1961 21. Wealth Tax22. Deferred Tax 23. Income Tax-Earlier Years24. Income Tax-Current Year25. Balance of Profit carried down TOTAL 26. Transfer to Investment Fluctuation Reserve27. Transfer to Special Reserve in terms of Section 36(1)(viii) of Income Tax Act, 196128. Transfer to Staff Benevolent Fund29. Transfer to Reserve Fund30. Balance Carried to Balance Sheet TOTAL


Profit & Loss Account

1,489.507.320.090.111.690.330.08

0.752.763.093.111.307.450.140.410.002.040.099.50

20.50

0.139.49

69.88129.00278.93

2,037.690.00

22.00

0.64245.81

17.92 286.37






Directors


167


for the year ended 30th June, 2011

Previous Year in Crore ` Income


1,338.20

105.87

32.35

31.88

1.89

9.11

0.51

0.01

22.89

2.20

0.98

6.77

0.00

1. Interest on Loans and Advances and Bank Deposits:

(i) Loans and Advances 1,770.31

(ii) Bank Deposits 108.18

2. Interest Income and Profit on Interest Rate Swaps

3. Income from Investments

4. Profit on Sale of Investments

5. Profit on Purchase and Sale of Mutual Fund

6. Premium on Forward Exchange Contract

7. Profit on sale of Fixed Assets

8. Other Income

9. Gains/(Loss) on revaluation of Forward Exchange Contracts

10. Provisions no longer required written back

11. Provisions and Contingencies (excess provision on investment reversed)

12. Excess provision for Income Tax of earlier years written back

1,878.49

21.06

38.46

0.00

5.93

0.83

0.06

2.98

1.61

0.04

0.00

88.23






1,552.66

280.25

0.00

TOTAL

13. Balance of Profit brought down

14. Transfer from Taxation Reserve

2,037.69

278.93

7.44

280.25 286.37TOTAL

168


Schedules to the Balance Sheet as at 30th June, 2011


450.00

450.00

450.00

Schedules

SCHEDULE - I

CAPITAL

1. Authorized

2. Issued and Paid-up (wholly subscribed by the

Reserve Bank of India)

450.00

450.00

450.00TOTAL

Schedule - IIReserves

# inclusive of interest earned on bank deposits of 0.50 Crore`

Description

1. Reserve Fund

2. Special Fund (Slum Improvement

& Low Cost Housing Fund)

3. Special Reserve in terms of Section

36(1)(viii) of Income Tax Act, 1961

4. Investment Fluctuation Reserve

5. Taxation Reserve

6. Staff Benevolent Fund

TOTAL

1,453.00

266.45

318.40

20.08

7.45

7.03

2,072.41

( ` in Crore)

Opening Balance

Closing Balance

245.81

17.92

22.00

0.00

0.00

1.14#

286.87

Additions Deductions

0.00

0.00

0.00

0.00

7.45

0.11

7.56

340.40

20.08

0.00

8.06

2,351.72

1,698.81

284.37

169




9.73

0.00

168.00

1,050.00

510.72

6,410.00

205.00

442.00

431.90

155.63

8,351.81

23.69

770.004,420.00

47.58

400.92

795.02

6,457.21

Schedules

Less:

1.

2.

3.

4.

5.

1.

2.

3.

1.

2.

3


SCHEDULE - III

PROFIT & LOSS ACCOUNT

Balance as per Profit and Loss Account

Profit of Special Fund (Slum Improvement

Low Cost Housing Fund) transferred and

to Special Fund A/c

SCHEDULE - IV

BONDS AND DEBENTURES

Bonds (Guaranteed by GOI)

Zero Coupon Bonds

Less: Deferred Discount on Zero Coupon Bonds

NHB Bonds

Priority Sector Bonds:

(a) Tax-free Bonds

(b) Taxable Bonds

(c) Special Series Bonds

Capital Gain Bonds

SCHEDULE - V

DEPOSITS

Deposits from Housing Finance Companies

Deposits from Banks under Rural Housing Fund

Other Deposits from Public

SCHEDULE - VIBORROWINGS

From Reserve Bank of India:

Line of Credit

From Other Sources:

(a) In India

(i) Borrowing against Term Deposits

(ii) Borrowing through Term Loan

(iii) Commercial Papers

(b) Outside India

CBLO Borrowings (Secured against pledge of Govt. Security and Treasury Bills with CCIL)

17.92

1,850.00

565.46

55.00

442.00

409.30

280.004,972.00

0.00

0.00

88.00

1,284.54

7,485.00

906.30

3.029,766.86

21.06

5,252.00

395.52

6,058.34

25.29

5,778.18

223.34

6,026.81

240.34

3,763.46

371.95

4,375.75

389.76

9.73 17.92 0.00

170




9.813.07

217.6880.6953.49

0.12

0.491.011.422.791.391.07

2.2081.7194.52

10. 000.00

0.235.80

7.4025.6066.11

0.55

667.15

237.2035.29

272.49

@0.20

8.081,350.02

3.83

426.89

1,789.02

SchedulesCurrent Year

in Crore`

SCHEDULE - VII CURRENT LIABILITIES AND PROVISIONS

1. Interest Payable: (a) Interest Payable on CG Bonds (b) Unclaimed Interest on CG Bonds (c) Interest Payable on Other Bonds and Debentures (d) Interest Payable on Deposits (e) Interest Payable on Other Borrowings (f) Interest Payable on CBLO Borrowing

2. Provision for Retirement Benefits: (a) Medical Expense for Retired Officers (b) Leave Encashment (c) Gratuity (d) Leave Travel Concession (e) Sick Leave (f) Pension

3. Other Provisions: (a) Provision for loss on Forward Exchange Contracts (b) Provision for Standard Assets (c) Provision for Bad and Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act, 1961 (d) Provision for future Non Performing Assets (e) Provision for diminution in the value of Restructured Accounts (f) Provision for HLA Deposits (g) Others

4. Deferred Profit on Interest Rate Swaps5. Redemption Payable Account6. Capital Gains Bonds Overdue Account7. UN-HABITAT Revolving Fund for implementation of

Water & Sanitation Projects

SCHEDULE - VIII OTHER LIABILITIES

1. Unsettled transactions of 1991-92 2. Interest Payable on unsettled transactions

SCHEDULE - IX CASH AND BANK BALANCES

1. Cash/ Cheques in Hand2. Current Account with Reserve Bank of India3. Balance with other banks

(a) In India (i) Current Accounts (ii) Term Deposits with banks (iii) Term Deposits with banks (Staff Benevolent Fund)

(b) Outside India Term Deposits with banks

0.46

91.21115.02

10.000.09

0.236.15

21.251,700.03

6.94

223.166.522.45

34.38

1.12

760.68

237.2035.29

272.49

@ 0.04

1,728.22

389.342,117.60

0.662.57

330.24 94.72

57.870.06 486.12

0.480.921.222.661.650.00 6.93

@ amount less than 0.50 Lakhs`

171




Schedules

SCHEDULE - X

INVESTMENTS

(at cost or market value whichever is less) 58.19 1. Government Securities (Pledged with CCIL for CBLO operations) 57.78

749.90 2. Treasury Bills (Pledged with CCIL for CBLO operations) 654.89

4.91 3. Shares of Housing Finance Institutions 6.91

0.53 4. Shares of Building Material Company 0.53 Less: Depreciation 0.00

5. Stocks, shares, bonds, debentures and Securities of other Institutions:

0.15

(a) Investment in Pass Through Certificates of SPV Trust

of which NHB is Trustee

45.00

(b) Subordinated Bonds

0.53 0.53

0.03

45.00 45.03

858.15 764.61

SCHEDULE -XI

LOANS AND ADVANCES I Refinance

1. Housing Finance Institutions:

10,860.57 (a) Housing Finance Companies 10,891.37

92.89 (b) Co-operative Housing Finance Societies 67.18 2. Scheduled Banks:

7,760.64 (a) Commercial Banks

343.16 (b) Regional Rural Banks

10,205.36

415.09

342.85 (c) Urban Co-operative Banks 11,036.73

53.15

3. State Co-operative Agriculture Rural Development Banks/

Land Development Banks 38.18

416.28

II Direct Lending

382.85 4. Housing Boards, Development Authorities, etc. 547.58

0.55 5. Water & Sanitation Projects under UN - HABITAT 0.41

19,836.66 Gross Loans and Advances 22,581.45 0.00 Less: Provisions for Non Performing Assets 0.00

19,836.66 Net Loans and Advances 22,581.45

172


CO

ST

BL

OC

K D

EP

RE

CIA

TIO

N

NE

T B

LO

CK

As

at

01.0

7.20

10A

dd

itio

ns

D

elet

ion

s

As

at

30.0

6.20

11

As

at

01.0

7.20

10A

dd

itio

ns

Del

etio

ns

As

at

30.0

6.20

11

As

at

30.0

6.20

11

-

-

35.1

2

17.1

1

0.90

-

18.0

1

17.

MO

TO

R V

EH

ICL

E

0.

41

0.

40

1.

17

1

.03

0.

13

0.39

0.

77

0.40

FU

RN

ITU

RE

AN

D

0.15

0

.21

2.

18

1.

89

0.08

0.

21

1.76

0.

42

0.05

0.08

1.68

1.47

0.

11

0.

08

1.50

0.

18

MIC

RO

PR

OC

ES

SO

R

1.

18

0.3

9 8.

41

6.99

0.

90

0.

38

7.

51

0.90

-

1.85

-

1.85

- 0.

62

-

0.62

1.

0.12

0.04

0.04

0.

12

0.07

0.02

0.

04

0.05

0.07

47.9

7

3.

68

1.12

50

.53

28.5

6

2.7

6

1.10

30.2

2

20

.

47.7

2 0.

860.

6147

.97

26.9

62.

200.

6028

.56

19.4

1

SC

HE

DU

LE

-X

II

FIX

ED

AS

SE

TS

Des

crip

tio

n A

s at

30.0

6.20

10

PR

EM

ISE

S

11

18.0

1

0.

13

FIX

TU

RE

0.3

5

OF

FIC

E

EQ

UIP

ME

NT

S

0.

24

CO

MP

UT

ER

AN

D

0.63

CO

MP

UT

ER

S

OF

TW

AR

E

23

-

AS

SE

TS

UN

DE

R

RE

SID

EN

CE

F

UR

NIS

HIN

G

SC

HE

ME

0.05

To

tal

31

19

.41

Pre

vio

us

yea

r

20.7

6

in

Cro

re`

7.62

1.71

2.24

1.16

35.1

2

thJu

ne,

201

1

Sch

edu

les

to t

he

Bal

ance

Sh

eet

as a

t 30

173




Schedules

SCHEDULE - XIII

OTHER ASSETS 1. Interest Receivable :

9.02 (a) Bank Deposits 65.19 4

5.11 (b) Investments 5.47 70.66

2. Advances, Receivables, Advance Tax & Prepaid Expenses: 1.68 (a) Staff Loans and Advances 1.58

24.93

(b) Advance Tax, FBT, TDS and Payment of Disputed

Tax Demand (net of provisions) 47.13 (c) Miscellaneous Recoverable

0.46 Considered Doubtful 0.46

0.46 Less : Provisions 0.46 0.00

2.05 (d) Prepaid Expense 1.82 6.01 (e) Deposit with CCIL including Interest receivable 6.01

(22.36)

(f) Amount Received/Recoverable from GOI for

adjustment of exchange loss on USAID Borrowing

13.85

0.97 (g) Others 2.15 72.54

7.05 3. Interest Receivable on Interest Rate Swaps 0.52

149.37 4. Unsettled transactions of 1991-92 149.37

0.84 5. Deferred Discount on Forward Exchange Contract 1.63 1.21 6. Advance for Development of Software 0.00

225.88 294.72

SCHEDULE -XIV

CONTINGENT LIABILITIES

2.30 1. Income Tax 58.06 2.79 2. Deposit under Home Loan Account Scheme 2.07

26.12 3. Guarantee given for Mortgage Backed Securitisation issue 20.00

42.87 4. Liability on account of Forward Exchange Contract 48.39

0.80 5. Liability on account of Capital Commitment 0.00 4.00 6. Liability on account of unpaid Equity Shares 2.00

78.88 130.52


174


SCHEDULE-XV date of acquisition.

Notes forming parts of the accounts (b) Investments which are intended to be held up to maturity are classified as “Held to (A) Significant Accounting PoliciesMaturity”.

1 General(c) Investments which are not classified in

The Bank prepares its accounts on accrual either of the above categories are classified basis in accordance with the generally as “Available for Sale”.accepted accounting principles.

3.2. Valuation:Balance Sheet and Profit and Loss Account

3.2.1. In determining acquisition cost of have been drawn in accordance with the investment:requirements of the National Housing

Bank Act, 1987 and National Housing Bank (a) brokerage/commission received on General Regulations, 1988 framed there subscriptions is deducted from the cost of under. securities.

The preparation of financial statements (b) brokerage and transfer charges incurred at requires that management makes estimates the time of acquisition are capitalized.and assumptions that affect the reported

(c) Interest accrued up to the date of amounts of assets and liabilities as of the acquisition of securities (i.e. broken period date of the financial statements and the interest) is excluded from the acquisition reported income and expense during the cost and charged to the revenue.reporting period. Management believes

that the estimates used in the preparation 3.2.2. Individual scrips classified under “Held of the financial statements are prudent and for Trading“ category, where market reasonable. Actual results could differ quotations are available, are valued at from these estimates. lower of book value or market value.

Depreciation, if any, is aggregated 2. Revenue Recognitioncategory-wise as per the classification of

Interest on loans and advances, except in investments prescribed by RBI and respect of non-performing assets, is recognized in the profit and loss account, accounted for on accrual basis. In respect of while appreciation is ignored. The book non-performing assets, interest is value of the individual scrip is changed.accounted for on receipt basis.

3.2.3. Investments under “Held to Maturity” Certain items of income (say, prepayment category are carried at acquisition cost. levy, penalty and miscellaneous receipts) Wherever the book value is higher than the are recognized on cash basis. face value/redemption value, the excess

amount is amortized equally over the 3. Investmentsremaining period of maturity.

3.1. Classification3.2.4. Investments under “Available for Sale”

Investments are classified into “Held for category are valued at cost or market price, Trading”, “Available for Sale” and “Held whichever is lower. Where market to Maturity” categories as below: quotations are not available, market value

for this purpose is arrived at on the basis of (a) The investments that are acquired with the realizable price computed as per Fixed intention to trade by taking advantage of Income Money Market and Derivatives the short-term price/interest rate Association of India/Primary Dealers movements are classified under “Held for Association of India / RBI guidelines. Trading”. These investments are held Depreciation, if any, is aggregated under this category upto 90 days from the

175


category-wise as per the classification of 5.2 Assets costing below 1000 are charged to investments prescribed by RBI and revenue.recognized in the Profit and Loss Account,

5.3 Depreciation on various assets is provided while appreciation is ignored. The book

on the following basis:-value of the individual scrip is not changed.

3.2.5. Treasury bills and commercial paper are valued at carrying cost.

3.2.6. In respect of debentures/bonds etc., where income/principal is not serviced, provision for depreciation is made as per norms of RBI.

3.2.7. Investment in equity shares of housing finance companies / building material industries are classified under the AFS 5.4 Depreciation on addition to assets is category and is valued at cost or market calculated for full period irrespective of value or on the basis of NAV (net asset the date of acquisition.value) as ascertained from the latest

5.5 As separate valuation of land in the value of balance sheet of the company where such

premises is not available, depreciation on companies are not listed whichever is less value of premises (including land) has been and in the absence thereof at the rate of Re. charged in respect of leasehold premises of 1 per company. the Bank.

4. Loans and advances6. Staff Benefits

4.1 Subscription to Special Rural Housing Liability for Gratuity, Pension, Sick Leave,

Debentures (SRHDs) of State Co-operative Leave Encashment, Medical Retirement Agricultural & Rural Development Banks Benefits and Leave Travel Concession is (ARDBs)/Land Development Banks determined on the basis of actuarial (LDBs) in respect of loans for rural housing valuation at the end of the period. by their branches/primary banks is shown

under Loans and Advances. Incremental liability is provided for by

charging to the Profit and Loss Account.4.2 Advances are classified into standard, Sub-7. Pre-paid expensesstandard, Doubtful and Loss assets and

provisions are made in accordance with the Pre-paid expenditure of 1 lakhs and prudential norms prescribed by RBI. below relating to maintenance contract,

insurance, subscription/membership fee 4.3 Advances are stated net of provision etc., is charged to current period towards non-performing advances.

expenditure. 4.4 Provision for standard assets as per the RBI

8. Income TaxGuidelines and provision u/s 36(1)(vii a) (c) of Income Tax Act, 1961 for bad and Provision for Income Tax for the current doubtful assets is grouped in the Balance period is determined on the basis of taxable Sheet under 'Current Liabilities and income computed after due consideration Provisions'. of legal opinion obtained on relevant

5. Fixed assets issues.

5.1 Fixed assets are stated at historical cost less accumulated depreciation. Deferred tax is recognized, on timing

`

`

9. Deferred Tax

Assets

1. Premises

2. Furniture & Fixtures

3. Computers , Software& Microprocessors

4. Other Assets

Method of Depreciation

Written down value

Straight Line

Straight Line

Straight Line

Rate (%)

5

10

33.33

20

176


difference, being the difference between c) The Profit / Loss on cancellation and

the taxable income and accounting renewal of foreign exchange contracts are

income for the year and quantified using recognised in profit & Loss Account under

the tax rates and laws enacted or the head 'Gain/Loss on revaluation of

substantially enacted as on the Balance Forward Exchange Contract Account'.

Sheet date. 12. Derivative Contracts

10. Wealth Tax Interest rate swaps which hedges interest

Wealth Tax is computed on the net taxable bearing asset or liability is accounted for on

wealth, in possession of the Bank, as per accrual basis. Gain or losses on the

Wealth Tax Act, 1957. termination of swaps are recognized over

the remaining contractual life of the swap 11. Foreign Exchange Transactionsor the remaining life of the asset/liability; 11.1 As per Accounting Standard (AS-11) whichever is shorter. (Revised 2003) on Accounting for the

(B) NOTES Effects of Changes in Foreign Exchange

13. Fixed AssetsRates issued by the Inst i tute of

Chartered Accountants of India; following 13.1 Registration formalities are in progress in accounting treatment is given to respect of commercial property situated at foreign exchange transactions: India Habitat Centre, Lodhi Road, New

Delhi and residential properties situated at a) Assets and liabilities in foreign currency are

Jangpura Extension, New Delhi and at revalued at the exchange rate notified by

Tilak Nagar, Mumbai having gross value Foreign Exchange Dealers Association of

(i.e., acquisition cost) of 24.90 Crore. India (FEDAI) as at the close of the year

and resultant Exchange difference on 13.2 In respect of the office space acquired at revaluation is charged to Profit and Loss India Habitat Centre (IHC), Lodhi Road, Account under the head “Gain / Loss on New Delhi, the exact cost has not been revaluation of foreign Deposits & apportioned by IHC among the different Borrowings”; and allottees. The tripartite agreement, in this

respect, is yet to be executed between Land b) Income and Expenditure items are

and Development Office (GOI), IHC and translated at the exchange rates prevailing

institution concerned (i.e., NHB). As such, on the date of the transaction.

a sum of 14.81 Crore has been capitalized 11.2 Accounting for Foreign Exchange by the Bank on the basis of payments made Contracts to IHC. Depreciation on this leasehold a) The Bank enters into Foreign Exchange office premises (including land) is charged Contracts to establish the amount of on WDV @ 5%. The lease amount which is Reporting currency required or available not known could not be amortised over the at the settlement date of a transaction. lease period, in the absence of lease

b) The foreign exchange contracts are agreement.

revalued at the exchange rates notified by 14. External Borrowings

FEDAI at the year end. The resultant 14.1 Under the Housing Guarantee Programme gain/loss on revaluation is recognized in

of USAID, the Bank had raised a loan of US the Profit & Loss Account under the head $25 million in the US Capital Market in the 'Gain/Loss on revaluation of Forward year 1990-91. The loan is repayable in forty Exchange Contract Account'. Premium / equal half yearly installments commencing Discount are accounted over the life of the from October, 2001. The outstanding contract.

`

`

177


balance of 55.88 Crore as on June 30, 2011 14.2 The Bank had borrowed US Dollar 120

is included under the head “borrowings million (equivalent to 564 Crore

from other sources-outside India”. outstanding of which, 339.64 Crore as on

Government of India (GOI) has guaranteed June 30, 2011) from Asian Development

the loan and also agreed to bear the Bank (ADB) in two tranches of USD 100

exchange loss, if any. The foreign currency million and USD 20 million during the year

funds received under USAID Programme 1997 and 2002, respectively. These loans

has been parked with Government of India are guaranteed by the Government of

against rupee funds made available by the India. The loans are repayable in half

Government to NHB. Consequently, the yearly installments by 2022 and 2025,

exchange risk on the foreign currency respectively.

funds is being borne by the Government of These dollar funds were placed as deposits India. In view of this, the foreign currency with Bank of India (USD 50 million), funds borrowed from USAID had not been Canara Bank (USD 50 million) and EXIM revalued. However, the Bank during the Bank (20 million) in the overseas branches year has changed this practice and in terms of agreements with these Banks. revalued USAID borrowings as on June 30, The deposits are amortized in half yearly 2011 and interest payable thereon. As a installments which are utilized for result of this the liability of borrowings repayment of loans from ADB maturing by from USAID & interest payable on such 2022 and 2025, respectively. In lieu of the borrowings increases by 31.14 Crore & USD deposit, these banks have subscribed

0.47 Crore respectively with consequent to Special Series Bonds issued by NHB for effect in the balance of amount recoverable 564 Crore ( 409.30 Crore is outstanding from GOI. However, this has no impact on as on June 30, 2011). These Special Series the profit & loss account of the Bank. Bonds are repayable in half yearly

The Bank received a sum of 36.66 Crore installments by 2022 and 2025,respectively.

in 2008-09 as advance from GOI towards 15. Revaluation of Foreign Deposits and estimated future exchange loss on the Borrowings/Forward Exchange Contractsabove Borrowing. As per the communication 15.1 During the year, net loss of 2.04 Crore on received from GOI, further exchange loss if revaluation of foreign deposits and any, shall be claimed from GOI at the end of borrowings has been recognized in the the period i.e. October'2021. After Profit and Loss Account under head 'Loss / adjustment of exchange loss till the last (Gain) on revaluation of Foreign Deposits instalment paid in April '2011 the and Borrowings'. outstanding advance as on June 30, 2011 is

15.2 In order to hedge forex risk on account of 17.76 Crore. Further, as per the

the excess inflow of USD, the Bank has understanding with GOI, the Bank has

entered into forward exchange contracts. provided interest @ 6% p.a. on the

During the year July, 2010 to June, 2011, outstanding advance.

forward exchange contracts for USD 0.855 As per revaluation of the above borrowing, million were cancelled and fresh contracts the loss on revaluation is recoverable from for a value of USD 1.24 million were GOI. The loss on revaluation recoverable entered. As on June 30, 2011, the Bank has from GOI as on June 30, 2011, after 20 outstanding contracts for an aggregate adjustment of the outstanding advance of amount of USD 10.825 million. The total 17.76 Crore, is 13.85 Crore and is shown unhedged amount as on June 30, 2011 was under 'Other Assets'. USD 6.15 Million.

`

`

`

`

`

` `

`

`

`

` `

178


15.3 During the year ended June 30, 2011, NHB retirement plan covering all employees

has booked gains on forward exchange who have opted for pension plan. The

contracts of `1.61 Crore in the Profit and scheme provides a monthly pension

Loss Account under the head 'Gain on payment to employees on retirement or

Forward Exchange Contracts'. Out of this termination of employment. The scheme is

gain, `0.08 Crore has been booked on managed by a separate trust and the

maturity of contracts. liability for the same is recognized on the

basis of actuarial valuation in addition to 16. Employee's Benefits (AS-15)Bank's monthly contribution to the fund. 16.1 The Bank has provided the liability During the year ended June 30, 2011 the towards employee benefits for Gratuity, Bank has contributed `1.74 Crore to Leave Encashment, Medical Retirement Pension Fund and charged same to Profit Benefits, Sick Leave, Leave Travel and Loss Account under the head 'Staff Concession and Pension on actuarial basis Salaries, Allowances and Terminal Benefits'.for its permanent employees in accordance

16.4 Defined benefit Obligations: Gratuity, with the revised AS-15 issued by ICAI. Leave Encashment, Medical Retirement 16.2 The Bank is transferring its contribution of benefits, Sick Leave, Leave Travel provident fund to Reserve Bank of India in Concession and Pension payable to respect of its employees who have opted employees.for Contributory Provident Fund. During

a) Methodology used in actuary calculation: the year ended June 30, 2011, the Bank has Actuary has used the Projected Unit Credit contributed `0.03 Crore to Provident Fund Method to assess the plan's liabilities and has charged the same to Profit and Loss including those related to death and service.Account under the head 'Staff Salaries,

Allowances and Terminal Benefits'. b) A reconciliation of opening and closing

balances of present value of defined benefit 16.3 As per National Housing Bank (Employees') obligation and the effects during the period Pension Regulations, 2003, the Bank attributable to each of the following:provides for pension, a defined benefit

Amount in As on June 30, 2011

`

Change in

benefit obligations

Gratuity

Leave

Encashment

Medical

Sick

Leave

Leave Travel

Concession

Pension

Present Value of

Obligation at the

beginning of the year

14,169,237 10,110,797 4,899,635

3,899,736

27,868,807

176,282,576

Current Service Cost

952,228 752,919 208,483

580,176

1,046,020

0

Interest cost 1,133,539 808,864 379,722 1,111,979 2,229,505 14,102,606

Actuarial

(Gain)/Loss on

Obligations

358,110 140,581 (336,407) 925,069 586,588 12,197,673

Benefits paid (4,382,925) (2,647,033) (407,974)

-

(5,106,043)

(11,656,824)

Present Value of

Obligation at the

end of the year

12,230,189 9,166,128 4,743,459

16,516,960

26,624,877

190,926,031

179


c) Amount recognized in the statement of Profit & Loss Account is charged under the head Gratuity,

Salary, Allowances & Terminal Benefits, Medical Expense to Retired Staff, Sick Leave, Leave

Travel Concession and Pension.

d) Investment details of plan assets:

The Bank has not funded the liability as on June 30, 2011. As such there is no fair value of assets

except for pension liability which is managed by a separate trust.

e) The Principal Actuarial assumptions used as at the Balance Sheet date:


`

Defined Benefits

Gratuity

Leave

Encashment

Medical

Sick

Leave

Leave

Travel Concession

Pension

Current Service Cost 952,228 752,919 208,483 580,176 1,046,020 -

Interest Cost

1,133,539 808,864 379,722

1,111,979

2,229,505

14,102,606

Expected return

on plan assets

NA NA NA

NA

NA

16,250,074

Actuarial

(Gain)/Loss

358,110 140,581 (336,407)

925,069

586,588

14,578,560

Expenses/

(Income)

2,443,877 1,702,364 251,798 2,617,224 3,862,113

12,431,092

Less: Amount

contributed by ex -employees

- - 107,189 - - -

Expenses/(Income)

recognized in the

statement of Profit

and Loss Account

by debit to expense

/ credit to

provisi on no longer

required Account

2,443,877 1,702,364 144,609

2,617,224

3,862,113

12,431,092

180



`

according to graduated

scale.


scale.


scale.


scale.


scale.


scale.

Morbidity Rate NA NA 16%. Adjustments

could be made later depending

on the experience of the scheme.

NA NA NA

Defined Benefits

Gratuity Leave Encashment

Medical Sick Leave

Leave Travel

Concession

Pension

Discount Rate 8% p.a. 8% p.a. 8% p.a. 8% p.a. 8% p.a. 8% p.a.

Salary Escalation Rate

6% p.a. 6% p.a. 6% p.a. 6% p.a. 6% p.a. 6% p.a.

Expected return on plan assets

NA NA NA NA NA 16,250,074

Mortality Rate LIC (1994-96) published

table of Mortality

Rates

LIC (1994-96) published

table of Mortality

Rates


table of Mortality

Rates


table of Mortality

Rates


table of Mortality

Rates


table of Mortality

Rates

Retirement Age 60 60 60 60 60 60

Withdrawal

Rate

3% at younger ages and reducing

to 1% at older ages


to 1% at older ages


to 1% at older ages


to 1% at older ages


to 1% at older ages


to 1% at older ages

f) Change in plan assets Amount in As on June 30, 2011

`

Gratuity Leave Encashment

Medical Sick Leave

Leave Travel

Concession

Pension

NA

NA

NA

NA

NA

177,002,336

NA

NA

NA

NA

NA

16,250,074

NA

NA

NA

NA

NA

(2,380,887)

NA

NA

NA NA

NA

(11,656,824)

NA

NA

NA NA

NA

18,764,903

Defined Benefits

Fair value of

plan assets at the beginning of the year

Expected return on plan assets

Actuarial Gain/(Loss)

Benefits paid

Employer contributions

Fair value of plan assets at the end of the year*

NA NA NA NA NA 197,979,602

181


* The Bank has not funded the liability as on June 30, 2011. As such there is no fair value of assets except liability for pension. g) Reconciliation of present value of the obligation and the fair value of the plan assets

17. Revenue Recognition Assets" represents the sum of ̀ 95.40 Crore

paid by the Bank to SBS during Interest on loans and advances, except in 1991-92 for purchase of securities and respect of non-performing assets, is ` 53.97 Crore paid by the Bank to the accounted for on accrual basis. In respect of custodian pursuant to the orders of the non-performing assets, interest is special court. Both the amounts and accounted for on receipt basis. Certain interest thereon, if any, will be adjusted on items of income (say: prepayment levy, final disposal of the appeal filed by the SBS penalty and miscellaneous receipts) are and NHB in the Supreme Court. recognized on cash basis. However, such

income is not considered to be material. 18.3 A sum of ̀ 40.25 Crore was appearing in the

books of NHB as unclaimed amount since 18. Security Transactions of 1991-921991-92. While passing a Decree in the year

18.1 A sum of ` 237.20 Crore appearing in the 1999 in favour of NHB in the above suit

Balance Sheet under the head "Other against SBS, the special Court noted this

Liabilities" includes a sum of ̀ 237.06 Crore fact and directed NHB to deposit a sum of

representing the decreed amount received ` 40.22 Crore with the Custodian, which

from State Bank of Saurashtra (SBS), since was duly deposited. Provision of Rs.35.29

amalgamated with State Bank of India in Crore for interest has been made on the

September, 2008, in a suit filed by NHB. above sum from 1991–92 till date of deposit

This amount will be adjusted on final with the Custodian. The provision of

disposal of the appeal filed by SBS and ` 35.29 Crore and the unclaimed balance of NHB in the Supreme Court. ` 0.03 Crore is being shown under the head

18.2 The sum of ` 149.37 Crore appearing in the “Other Liabilities' and will be adjusted on

Balance Sheet under the head "Other final disposal of the appeal pending in the


`

#Surplus not recognized in the accounts.

Defined Benefits

Gratuity Leave

Encashment

Medical Sick

Leave

Leave Travel

Concession

Pension

Fair value of

plan assets at

the end of the

year

NA NA NA NA NA 197,979,602

Liability at the

end of the year

12,230,189 9,166,128

4,743,459 16,516,960 26,624,877 190,926,031

Net asset/( Liability)recognized in Balance Sheet

(12,230,189) (9,166,128)

(4,743,459) (16,516,960) (26,624,877) 7,053,571#

182


Supreme Court as referred above. dated January 6 and February 21, 2011, the

Special Court at Mumbai, has directed 18.4 The disputes between NHB & SBI and NHB distribution of the amounts realized from

& Grindlays Bank (since amalgamated the estate of Harshad Mehta. After

with Standard Chartered Bank) have been distribution of the amount to the Income

settled and no claim exists between the Tax department in the priority period, the

parties against each other. However, any Special Court has directed that in favour of

money to be recovered from the estate of decree holder the remaining amount be the late Sh. Harshad Mehta by SBI and distributed depending upon the date of Standard Chartered Bank in accordance decrees. A sum of `100 Crore has been with the decrees passed in their favour by directed to be released to SBI against its

the Special Court will be shared by them decree in Suit No. 41 of 1995 and Misc.

with NHB in the agreed manner and will be Petition No. 63 of 1992. The decree in Suit

No.41 of 1995 is of 137.11 Crore and in accounted for on actual receipt.

Misc. Petition No. 63 of 1992 it is ` 706.97 18.5 As per the Terms of the Settlement agreed

Crore. Clarification with regard to the between the State Bank of India and the

decree, against which the appropriation National Housing Bank on October 30,

of ` 100 Crore had been made, is sought 2002, the National Housing Bank was to

from SBI.cooperate with the State Bank of India in

19. Segment Reporting Miscellaneous Petition No.63 of 1992 and

The Bank's operations predominantly recoveries made if any in the said petition

comprise only one segment i.e. financial was to be shared between the State Bank of

activities. Hence, there are no separate India and the National Housing Bank in

reportable segments as per the Accounting such proportion as may be determined by

Standard on “Segment Reporting” (AS 17) the Reserve Bank of India.

issued by the Institute of Chartered Pursuant to Hon'ble Supreme Court orders Accountants of India.

`

20. Related Party Transactions List of Related Parties:

Key Managerial Personnel : Shri R. V. Verma

Name of

the Party Nature of

Relationship Nature of

Transaction Amount of

transaction

during the year

Outstanding

Shri S. Sridhar

(Upto14 .09.2010) Key Management

Personnel-

Ex- Chairman &

Managing Director

Remuneration

& benefits

including

perquisites

`1.64 lakhs

(paid to Central

Bank of India

towards

Gratuity)

-

Shri R.V.Verma

(w.e.f. 15.09.2010)

Key Management

Personnel-

Chairman &

Managing Director

Remuneration

& benefits

including

perquisites

`14.48 lakhs

-

183


As the Bank is state controlled enterprise 21.3 Income Tax Assessments have been

within the meaning of AS-18 'Related Party completed disallowing the claims in

Transaction', the details of the transactions respect of the Special Reserve created u/s

with other state controlled enterprises are 36(1)(viii) of the Income Tax Act, 1961 for

not given. the AYs 2003-04 to 2008-09 and business

loss of `150.45 Crore in respect of AY 21. Income tax

2003-04. The Bank has preferred appeals

21.1 The provision for income tax of `129.00 against the said disallowances before

Crore for the current year (previous year - CIT(Appeals) / ITAT. However, the

`136.00 Crore) has been made as per demands raised have been duly paid/

applicable enactments. adjusted.

21.2 The Hon'ble Income Tax Appellate In view of the legal opinion obtained, the

Tribunal (ITAT) vide its order dated Bank is of the view that the claim would be

26.02.2009 held that the Bank is not liable considered in its favour. During the year,

to Income Tax under the Income Tax Act the Bank has made additional provisions

1961 for AY 2002-03. Against the said for tax of `39.71 Crore (net) for said years

order, the Income Tax Department has and also created deferred tax liability of

sought permission from COD for filing an `15.36 Crore for AYs 2007-08 and 2008-09.

appeal before the Hon'ble High Court. The Bank is holding necessary provisions

However, the bank has not received any for tax after considering claim u/s

notice from the Hon'ble High Court in this 36(1)(viii). However, the Bank has

regard. In view of the legal opinion maintained deferred tax liability, to the

obtained the Bank has written back extent of tax on such claim, for the

provision for Income Tax of `58.06 Crore aforesaid years. The year-wise details are

and has also not retained DTL. The Bank given as under:

has, however, retained special reserve of

` 53.39 Crore for the said year.

Assessment

Year

Tax Demand

Tax Provision

already

held

Additional provision /

(Reversal of excess

provision)

Difference

Deferred

Tax

Liability maintained

1 2

3

4

5=(2 - 3 -4) 6

78.32

23.09

51.88

3.35

3.35

81.01

42.00

15.76

23.25

23.25

34.59

30.83

(14.02)

17.78

17.78

49.15

40.00

2.14

7.01

7.01

69.12

69.30

(11.82)

11.64

11.64

2003 -04

2004 -05

2005 -06

2006 -07

2007 -08

2008 -09 79.29

79.80

(4.23)

3.72

3.72

Total 391.48 285.02 39.71 66.75 66.75

( in Crore)`

184


22. Deferred Tax21.4 In respect of AY2009-10, the Bank is holding

provision for tax without considering the 22.1 Deferred Tax Assets and Liabilities arising

deduction u/s 36(1)(viii) of the Income Tax on account of timing differences and which

Act, 1961. During the year, the Bank has are capable of reversal in subsequent

also created the deferred tax liability of periods are recognized using tax rates and

`3.83 Crore for the said assessment year. tax laws that have been enacted or

subsequently enacted till the date of the 21.5 Finance [No.2] Act, 2009 has substituted a

Balance Sheet. Deferred Tax Assets are not part of the Explanation to clause (viii) of

recognized unless there is 'virtual sub-section (1) of Section 36 of the Income

certainty'that sufficient future taxable Tax Act 1961 by which the activities of the

income will be available against which Bank have been specifically covered from

such deferred tax assets will be realized. AY 2010-11. As per the legal opinion

obtained, claim of the Bank under section 22.2 As on June 30, 2011, the Bank has recorded

36(1)(viii) of the Income Tax Act for the net deferred tax liability (DTL) of ` 91.79

years prior to the AY 2010-11 is not Crore. A composition of deferred tax assets

adversely affected in any manner. and liabilities into major items is given

below:

( in Crore)`

Sl.

No.

Particulars

June 30,

2011

June 3 0,

2010

Deferred Tax Assets:

1

Provision for Medical aid to Retired Staff

0.15 0.16

2

Provision for Leave Encashment

0.30 0. 34

3

Provision for Gratuity

0.40 0. 47

4

Provision for Leave Travel Concession

0.86 0. 93

5

Provision for expenses

0.00

0. 63

Total Deferred Tax Assets (A)

1.71 2. 53

Deferred Tax Liabilities:

1

Depreciation 1.11

1.02

2

Special Reserve u/s 36(1)(viii) of Income

Tax Act, 1961

(Rs.75.04 Crore for the AYs

2003 -04 to 2009 -10)

92.39

8 3 .81

Total Deferred Tax Liabilities (B) 93.50

8 4 .83

Net Deferred Tax Liability (B -A) 91.79 8 2 .30

185


22.3 During the year ended June 30, 2011, an Ltd., a housing finance company in the

amount of `9.49 Crore has been charged private sector, which was one of the

to the 'Profit and Loss Account' towards participating HFC for mobilization of

deferred tax and DTL has been increased to deposits under HLAS, was advised by

that extent. NHB not to open new accounts/accept

fresh deposits under HLAS with effect 23. Home Loan Account Scheme from 01.10.1994 due to serious financial 23.1 The Home Loan Account Scheme (HLAS) problem faced by it. NHB being the was launched by NHB with effect from principal under the scheme, was obliged to July 1, 1989 all over the country and was meet liability to pay account holders their operated through Scheduled Banks and dues. The Bank assessed the initial liability Housing Finance Companies (HFCs). The of `0.49 Crore as against verifiable HLAS has been discontinued effective claimants of IHFD under HLAS and made from March 1, 2004. provision of the equal amount in 2004-05.

23.2 The assets and liabilities referred to above As per the approved procedure, claims for

are identical and have been shown as refund of `0.26 Crore was paid till

contra entries in the Balance Sheet.June 30, 2011 and balance of `0.23 Crore

23.3 The deposits under HLAS held by the stood as liability as on that date.

banks/HFCs aggregating `2.07 Crore was 24. Other Expendituredisclosed in the balance sheet as reported

The break-up of other expenditure shown by the banks/HFCs as on March 31, 2011. in the Profit and Loss Accounts is as under: 23.4 India Housing Finance and Development

Particulars

Current year

Previous

1. Repair and Maintenance

1.33

1.31

2. Research and Development

0.23

0.40

3. Service Tax Expense

0.32

0.31

4. Prior Period Expense

0.19

0.02

5. Conveyance Expense

0.81

0.70

6. Professional Fee

0.26

0.23

7. Conference Expense

0.13

0.15

8. Hospitality Expense

0.09

0.09

9. Expenses on IT related services

0.82

0.86

10. Payment to outsourced services

0.86

0.92

11. Security Service Expense

0.79

0.61

12. Others 1.63 1.86

Total 7.46 7.47

( in Crore)`

186


25. Investment Fluctuation Reserve Account countries of the Asia Pacific Region. Till

June 30, 2011, NHB received USD 106,000 As per RBI guidelines on prudential norms

(equivalent to ̀ 0.46 Crore) towards the cost for classification, valuation and operation

of the said project from UNESCAP. The of investment portfolio for FIs, the

account in respect of the amount received provision required to be created on account

and utilization there of towards the cost of of depreciation in the Available for Sale

study has been maintained separately and category in any year should be debited to

grouped under the head as 'others' under the Profit & Loss Account and an

'Current Liabilities and Provisions'. Till equivalent amount (net of taxes) or balance

June 30, 2011, an amount of ̀ 0.35 Crore has available in the Investment Fluctuation

so far been utilized and balance of `0.11 Reserve (IFR) Account, whichever is less,

Crore has been paid back to the agency shall be transferred from Investment

during the year. Fluctuation Reserve Account to the Profit &

Loss Account. In the event provisions 28. United Nation Human Settlement

created on account of depreciation in the Programme

available for sale category are found to be in The Bank has received a revolving fund of

excess of the required amount in any year, `1.12 Crore (equivalent to US$ 251,250) for

the excess is credited to the Profit & Loss onward lending to Micro Finance

Account and an equivalent amount (net of Institutions towards Water and Sanitation

taxes, if any) is appropriated to the Programme in India. The amount has been

Investment Fluctuation Reserve Account.shown separately under 'Current Liabilities

During the year, the Bank has not and Provisions'. Till June 30, 2011, the Bank

transferred/withdrawn any sum to/ from has disbursed `0.55 Crore (of which `0.41

Investment Fluctuation Reserve as there is Crore is outstanding as on June 30, 2011)

no depreciation/reversal on investment in and the same is shown separately under the

AFS category. head 'Loans and Advances'. The Bank has

earned an amount of `0.04 Crore towards 26. Impairment of assets

interest on the disbursement made under In the opinion of the management, there is

the programme till June 30, 2011 and the no material impairment of any of the Fixed

same has been considered as income of Assets of the Bank as per the Accounting

the BankStandards 28-Impairment of Assets.

29. Investment – classification 27. Study on Pro-poor Housing

As stated, investments are classified into NHB and United Nations Economic and

“Held for trading”, “Available for Sale” Social Commission for Asia and Pacific

and “Held for Maturity” categories as per (UNESCAP) have jointly undertaken a

the following details:. study on pro-poor housing finance in select

187


30. Contingent LiabilityThe movement in Contingent Liability as required in AS - 29 is as under:

( in Crore)`

31. Rural Housing Fund `2,000 Crore. Further, Government of India allocated `2,000 Crore for the year 2010-11. Rural Housing Fund was first established Against this allocation, the Bank received as per the announcement made by the the entire amount of `2,000 Crore by Hon'ble Finance Minster, while presenting June 30, 2011. Thus total amount under the budget for the year 2008-09. The fund Rural Housing Fund is `5,778.18 Crore as was set up with contribution by scheduled on June 30, 2011. commercial banks not achieving their

priority sector lending obligations. The 32. Zero Coupon Bondsfund was set up with National Housing During the year 2008-09, the Bank had Bank (NHB) to enhance its refinancing issued Zero Coupon Bonds (ZCBs) for a operations to the rural housing sector. For face value of 1,050 Crore, discounted the 2008-09 the Bank has received an value being `453.39 Crore. These bonds amount of `1,778.18 Crore as against the were issued for tenure of ten years. The allocation of 2,000 Crore by Reserve Bank discount is amortised over the tenure of the of India. Similarly, Government had bonds. A sum of `59.63 Crore has been allocated `2,000 Crore for the year 2009-10 amortised during the financial year under the Rural Housing Fund and the 2010-11. The unamortized balance as on Bank has received entire allocation of June 30, 2011 is ̀ 451.09 Crore.

`

`

Categories of investment

Investments

As on June 30, 2011

As on June 30, 2010

Held to Maturity

(HTM)

a) GOI Dated Securities b) Investment in Pass Through

Certificates of the SPV Trust of

which NHB is Trustee

c) Subordinated Bonds Sub-total

Available for Sale

(AFS)

a) Treasury Bills

b) Stocks of Housing Finance

Institutions

c) Building Material Company

Sub-total

Gross Investments

Less: Depreciation

Net Investments

57.78

0.03

45.00

102.81

654.89

6.91

0.53

662.33

765.14

0.53

764.61

58.19

0.15

45.00

103.34

749.90

4.91

0.53

755.34

885.67

0.53

858.15

( in Crore)`

Particulars 0June 3 , 2011 June 30, 2010

Opening Balance as on July 1, 2010 129.67

Addition during the period 0.00

Reduction during the year (50.79)

Closing Balance as on June 30, 2011

78.88

61.27

(9.63)

130.52 78.88

188


Further, the Bank has issued Zero Coupon certificates of beneficial interest and act as Bonds (ZCBs) during the year 2010-11 for a Trustee for the holders of such securities face value of `800 Crore, discounted value under the National Housing Bank being `642.17 Crore. These bonds were Amendment Act, 2000 (Sections 14 (ea), 14 issued for tenure of three years with (eb), 14 (ec) and 18). During the calendar put/call option after 366 days. The year 2000-2007, NHB has completed 14 discount is amortized over the tenure of residential mortgage backed securitization bonds. A sum of `43.46 Crore was (RMBS) transactions involving 38,809 amortized during the period. The individual housing loans of six Housing unamortized balance as on June 30, 2011 is Finance Companies (HFCs) and one `114.37 Crore. Scheduled Commercial Bank, for `862.20

Crore. The transaction involves assignment 33. Interest Rate Swapsand transfer of a pool of housing loans The Bank during the month of May, 2007 along with the underlying mortgages, from introduced a new product of floating rate the primary lending institution to NHB. refinance linked to 1 year INBMK rate. Simultaneously, an express declaration of In order to hedge the lending of refinance trust is made by NHB in respect of the priced on the same bench mark, the mortgage debt, appointing itself as the Bank entered into Interest Rate Swap trustee for the benefit of the investors. Once transactions wherein NHB would receive the assets have been declared property in fixed rate of interest on the notional trust (“the Trust”), the Trust will issue Pass principal and pay floating rate of 1 year Through Certificates to investors. During INBMK insulating NHB from any the financial years 2008-09 & 2009-10, 6 variations in the market benchmark. The RMBS transactions and their respective Bank had entered into fourteen Interest Special Purpose Vehicle trust have been Rate Swaps for a notional principal amount closed. Similarly, during the financial year of ̀ 1,500 Crore during 2006-07 and 2007-08 2010-11, 1 RMBS transaction has been with various counter parties.closed. As on June 30, 2011, 7 RMBS

Out of the above, Interest Rate Swaps for a transactions totaling to `58.79 Crore are

notional principle of `900 Crore were outstanding.

outstanding as on July 1, 2010. During the 35. Loan and advancesperiod July 2010 to June 2011, the Bank has

Of the total outstanding loans and further unwound four contracts of Interest advances of `22,581.45 Crore, loan and Rate Swap (IRS) for a notional principal of advances amounting `5,668.55 Crore are `400 Crore. The amount received on secured by a charge on books debts, termination of these IRS is recognized over government guarantee, bank guarantee, the remaining contractual life of the swap. equitable mortgage on fixed assets, Accordingly, the Bank has earned a profit hypothecation of movable assets and lien of `3.80 Crore on the IRS unwound during over bank deposits. Balance loans and advances the year of which `1.15 Crore has been amounting ̀ 16,912.90 Crore are unsecured.booked during the year and the balance

profit of ̀ 2.65 Crore will be booked over the The Bank has restructured a loan residual maturity period of the IRS. As on amounting `1.29 Crore, having an June 30, 2011, the Bank has five IRS outstanding balance of `1.06 Crore as on outstanding with notional principal of 30.06.2011, has been classified as Standard `500 Crore. Assets. The Bank has made provision @ 2%

on the said outstanding in terms of RBI 34. Securitisation circular RBI 2010-11/529 DBOD.No.BP.BC NHB is authorized to carry out 94/21.04.048/2011-12. The Bank has also securitization transactions and issue made for diminution in the fair value mortgage backed securities as trust assets.

189


36. Consolidation of Special Fund with the Reserve Bank of India under Section 40 (1) General Fund of the National Housing Bank Act, 1987.

36.1 The Voluntary Deposits (Immunities and 36.2 Accordingly, the Profit and Loss account Exemptions) Act, 1991 was passed with the and the Balance Sheet of the Special Fund objectives of providing certain immunities have been prepared as per the provision of and exemptions from direct taxes to the National Housing Bank (Slum persons making voluntary deposits with Improvement & Low Cost Housing Fund) the Nat ional Housing Bank and Regulations, 1993 and attached as exemptions from direct taxes in relation to Annexure to these financial statements. such amounts. The amount so collected The balance lying in the Special Fund is under the Voluntary Deposits Scheme is included under the head “Reserves” in the required to be kept in a Special Fund Bank's consolidated Balance Sheet. exclusively for the purpose of financing Various assets and liabilities of the Special slum clearance and low cost housing for Fund have also been grouped in the the poor. In terms of National Housing consolidated Balance Sheet under the Bank (Slum Improvement & Low Cost respective heads.Housing Fund) Regulations, 1993, Profit 37. Regroupingand Loss Account for the year ended 30th

Figures for the previous year have been re-June and Balance Sheet as on that date are grouped, wherever necessary, so as to required to be prepared each year in make them comparable with those of the respect of the Special Fund and audited by current year. the Statutory Auditors appointed by the

38. (a) Cash Flow Statement for the year ended June 30, 2011 ( in Crore)`

A) CASH FLOW FROM OPERATING ACTIVITIES

Net Profit as per Profit & Loss Account 278.93

Adjustments for:

Provision for Tax

198.88

Excess Provision for Income Tax

(88.23)

Provision for Wealth Tax

0.13

Provision for Deferred Tax

9.49

Depreciation on fixed assets

2.76

Write offs

0.15

Depreciation on investments & amortization expense

0.41

Provisions of diminution in the Fair value of Restructured Advances

0.09

Provision for Standards Assets

9.50

Loss on revaluation of deposits and borrowings

2.04

Provision for Bad Debts u/s 36(1)(viia)(c) of IT Act

20.50

Profit on sale of Fixed Assets

(0.06)

Gain on Forward Exchange Contract

(1.61)

Provisions no longer required written back

(0.04)

Income from Investments

(38.12)

Profit on purchase and sale of Mutual Funds

(5.93)

Dividend on Equity of Housing Finance Companies (0.34)

Operating Profit before working capital changes 388.55

190


Adjustments for Working Capital

(Increase)/Decrease in Deposits with Banks (317.60)

(Increase)/Decrease in Loans & Advances

(2,627.25)

(Increase)/Decrease in Other Assets

(51.31) Increase/(Decrease) in Current Liabilities

(48.01)

Net cash from operating activities before taxes paid

(2655.62)

Less : Income Taxes Paid

(132.90)

NET CASH FLOW FROM OPERATING ACTIVITES BEFORE EXTRAORDINARY ITEMS (A)

(2,788.52)

B) CASH FLOW FROM INVESTING ACTIVITIES BEFORE

EXTRAORDINARY ITEMS

(Increase) / Decrease in Fixed Assets

(3.61)

(Increase)/Decrease in Investments 93.13

Income from Investments 38.12

Profit on purchase and sale of Mutual Funds 5.93

Dividend on Equity of Housing Finance Companies

0.34

NET CASH GENERATED FROM INVESTING ACTIVITES BEFORE EXTRAORDINARY ITEMS

133.91

Extraordinary items

0.00

NET CASH GENERATED FROM INVESTING ACTIVITES AFTER EXTRAORDINARY ITEMS (B)

133.91

C) CASH FLOW FROM FINANCING ACTIVITIES

Net income under Staff Benevolent Fund

0.39

Increase / (Decrease ) in Bonds & Debentures

1,415.04

Increase / (Decrease ) in Deposits

1,651.06

Increase/(Decrease) in Borrowings

(398.87)

NET CASH GENERATED FROM FINANCING ACTIVITES ( C)

2,667.62

Net increase in cash and cash equivalents (A+B+C)

13.01

Cash and cash equivalents at the beginning of the year

8.28

Cash and cash equivalents at the end of the year 21.29

39. Additional Disclosures as per RBI Guidelines

39.1 Capital:

Particulars 30.06.2011 30.06.2010

a. (i) Capital to Risk Assets Ratio (CRAR) 20.64% 19.59%

(ii) Core CRAR

19.39% 18.34%

(iii) Supplementary CRAR

1.25%

1.25%

38 (b) Schedule to Cash & Cash equivalents

Particulars

Cash in hand

Balance with Reserve Bank of India

Balance with banks-Current Account

Cash and cash equivalent after exchange rate adjustments

0.00

0.20

8.08

8.28

0.00

0.04

21.25

21.29

At the beginning of the year

At the end of

the year

191


b. Amount of subordinated debt raised and outstanding as Tier II Capital: Nil (Previous Year-Nil)

c. Risk Weighted Assets:

Particulars 30.06.2011 30.06.2010

(i) On balance sheet items 14,256.37 13,512.63

(ii) Off balance sheet items 27.25 36.86

d. Share-holding pattern as on the date of the Balance Sheet: Capital of the Bank is wholly subscribed by the Reserve Bank of India39.2 Asset Quality & Credit Concentration :e. Percentage of Net NPAs to Net Loans and Advances :

Nil (Previous Year-Nil)f. Amount and percentage of Net NPAs under the prescribed asset classification categories :

Particulars 30.06.2011 30.06.2010 Amount %age Amount %age

-Sub Standard 0.00 0.00 0.00 0.00 Doubtful 0.00 0.00 0.00 0.00 Loss 0.00 0.00 0.00 0.00

Total 0.00 - 0.00 -

g. Amount of provisions made during the year:

Particulars 30.06.2011 30.06.2010

- Standard Assets

9.50 0.00 - Bad Debts u/s 36(1)(viia) of the IT Act, 1961 20.50 22.00 - Investments

0.41 0.31

- Wealth Tax

0.13 0.07 - Income Tax -Earlier Years

69.88 0.00

- Income Tax -Current Year

129.00 136.00 - Deferred Tax (net) 9.49 5.79

h. Movement in net NPAs:

There is no movement in net NPA being net NPA is Nil (Previous Year-Nil)

i. Credit exposure as percentage to capital funds and as percentage to Total Assets:

( in Crore)`

( in Crore)`

( in Crore)`

30.06.2011 30.06.2010

Particulars

% age to Capital Fund

% age to total assets

% age to

% age to total assets

The largest single borrower 62.48% 7.15% 67.05% 7.82%

The largest borrower group 82.66% 9.46% 85.68% 10.00%

The 10 largest single borrowers 467.63% 53.49% 452.35% 52.78%

The 10 largest borrower groups$ 106.51% 12.18% 234.60% 27.38%

$ NHB has only two borrower groups

Capital Fund

192


j. Credit exposure to the five largest industrial sector as percentage to total loan assets:

Not Applicable

39.3 Liquidity:

k. Maturity Pattern of rupee assets and liabilities

l. Maturity Pattern of foreign currency assets and liabilities

39.4 Operating results:

Particulars

2010-11

2009-10

m. Interest Income* as a percentage to average Working Funds

7.74%

7.27%

n. Non - interest income as a percentage to average Working Funds

0.04%

0.17%

o. Operating profit as a percentage to average Working Fund

1.72%

2.14%

p. Return on average Assets 1.11% 1.35%

q. Net Profit per employee (Rs. in Crore)

3.21 3.15

* including dividend on investments

( in Crore)`

39.5 Movement in the provisions:

I. Provisions for Non Performing Assets (Loan Assets)

Opening balance as at the beginning of the financial year 10.00 10.00Add : Provisions made during the year Less: Write off, write back of excess provision

0.00 0.00

0.00 0.00Closing balance at the close of the year 10.00 10.00

Note: The Bank is holding provision for NPA but does not have any NPA as on 30.06.2011

( in Crore)`

Particulars 2010-11 2009-10

Items Less than or equal to 1

year

More than a year upto 3

years

More than 3 years upto

5 years

More than 5 years upto 7

years

More than 7 years

Total

Rupee Assets 9,905.20 11,182.62 2,773.11 1,153.15 377.35 25,391.43

Foreign Currency Assets 22.97 50.71 57.85 66.04 191.77 389.34

Total 9,928.17 11,233.33 2,830.96 1,219.19 569.12 25,780.77 Rupee Liabilities 10,745.32 3,090.11 2,443.62 4,966.03 4,140.17 25,385.25

Foreign Currency Liabilities 26.92 58.10 64.42 71.61 174.47 395.52

Total 10,772.24 3,148.21 2,508.04 5,037.64 4,314.64 25,780.77

193


II. Provisions for Depreciation in Investments

2010

Opening Balance at the beginning of the financial year

0.53

7.12

Add: Provisions made during the yeari)

0.00

0.00

ii) Appropriation, if any, from Investment Fluctuation Reserve Account during the year 0.00 0.00

Less : Write off during the yeari)

0.00 0.00ii) Transfer, if any, to Investment Fluctuation Reserve Account 0.00 6.59

Closing balance at the close of the financial year 0.53 0.53

39.6 Restructured Accounts:

Particulars

a) Total Amount of loan assets

1.06 1.18

b) Sub-standard/doubtful assets Nil Nil

39.7 Financial Assets Sold to Securitisation Company / Reconstruction Company:

Particulars

a) No. of Accounts 0 0 b) Aggregative value (Net of Provisions) of Accounts sold to SC/RC 0.00 0.00 c) Aggregate consideration 0.00 0.00 d) Additional consideration realized in respect of Accounts

transferred in earlier years 0.00

0.00

e) Aggregate gain / loss over net book value 0.00 0.00

39.8 Forward Rate Agreements and Interest Rate Swaps:

Particulars

a) Notional principal of swap agreements

500

900

b) Nature and terms of the swaps

Fixed to Floating Hedge Interest Rate

Swap

Fixed to Floating Hedge Interest Rate

Swap

c) Quantification of losses which would be incurred if the counter parties failed to fulfil their obligations under the agreements

3.55 48.34

d) Collateral required by the entity upon entering into swaps

NA NA

e) Any concentration of credit risk arising from the swaps

3.55 48.34

f) The "Fair" value of total swaps book

0.59 39.34

( in Crore)`

( in Crore)`

( in Crore)`

( in Crore)`

2009-102010-11

2009-102010-11

2009-102010-11

2009-10-11Particulars

194


39.9 Interest Rate Derivatives: Nil (Previous Year-Nil)

39.10 Investments in Non Government Debt Securities: A. Issuer Categories in respect of investments made

B. Non performing investments ( in Crore)`

Sl. No. Issuer Amount

Amount of investments

made through private

placement

' below investment

grade' Securities

held

'unrated' Securities

held

'unlisted' Securities

(1) (2) (3) (4) (5) (6) (7) 1 0.00 0.00 0.00 0.00 0.00

2 0.00

0.00

0.00

0.00

0.00

3

45.00

45.00

0.00

0.00

0.00

4

0.00

0.00

0.00

0.00

0.00

5

0.00

0.00

0.00

0.00

0.00

6

0.03

0.03

0.00

0.00

0.03

7

0.00

0.00

0.00

0.00

0.00

PSUs

FIs

Banks

Private Corporates

Subsidiaries/Joint Ventures

Others

Provisions held towards depreciation

Total 45.03 45.03 0.00 0.00 0.03

( in Crore)`

Sl. No.

Issuer

Amount

Amount of

investments made

through private

placement

' below investment

grade' Securities

held

'unrated' Securities

held

'unlisted' Securities

(1) (2) (3) (4) (5) (6) (7)

1 PSUs 0.00 0.00 0.00 0.00 0.00

2 FIs 0.00 0.00 0.00 0.00 0.00

3 Banks 45.00 45.00 0.00 0.00 0.00

4 Private Corporates 0.00 0.00 0.00 0.00 0.00

5 Subsidiaries/Joint Ventures 0.00 0.00 0.00 0.00 0.00

6 Others 0.15

0.15 0.00 0.00

0.15

7 Provisions held towards depreciation

0.00

0.00 0.00 0.00

0.00

Total 45.15 45.15 0.00 0.00 0.15

( in Crore)`Previous Year

Particulars 2010

Opening balance 0.53 0.53

Additions during the year 0.00 0.00

Reductions during the year 0.00 0.00

Closing balance 0.53 0.53

Total Provisions held 0.53 0.53

-11 2009 -10

195


39.11 Consolidated Financial Statements: NHB has no subsidiary

39.12 Disclosure on Risk Exposures in Derivatives:

a) Qualitative Disclosure

• The Bank has in-place derivative policy approved by the Board which permits use of derivative products in line with business goals of the Bank. The policy has delegated powers to enter into swaps only at very senior level.

• Counter party exposure limits are within the overall limits set for each counter party. The credit equivalent of swaps are computed as per current exposure method as prescribed by RBI.

• The Bank has the necessary infrastructure where the functions are well defined i.e Front Office, Back Office & Mid Office.

• The position of the swaps is continuously monitored. ALCO reviews the position on a weekly basis; the valuations of the outstanding positions are monitored on a monthly basis. Further, the Board is apprised of the position on a quarterly basis including the valuation of the swaps.

• The Bank uses financial derivative transactions predominantly for hedging its assets/liabilities and for reducing cost. The Bank currently deals only in plain vanilla over-the-counter (OTC) interest rate and currency derivatives, for managing interest rate risks. The Bank shall use such bench marks where pricing is transparent and that are permitted by RBI.

• The interest exchanged on the swaps is accounted on an accrual basis.

b) Quantitative Disclosure

Sl.

No.

Particulars

Currency

Derivatives

Interest Rate

Derivatives

2010-11

2009-10

2010-11

2009-10

1

Derivatives (Notional Principal Amount)

a) For hedging

0.00

0.00

500.00

900.00

b) For trading

0.00

0.00

0.00

0.00

2

Marked to Market Position

a) Asset (+)

0.00

0.00

0.59

39.34

b) Liabilities (-)

0.00

0.00

0.00

0.00

3

Credit Exposure

0.00

0.00

3.55

48.34

4

Likely impact of one percentage change in interest rate (100*PV01)

a) on hedging derivatives

0.00

0.00

1.74

12.03

b) on trading derivatives

0.00

0.00

0.00

0.00

5

Maximum and Minimum of 100*PV01 observed during the year

a) on hedging

-

Maximum

0.00

0.00

12.03

16.48

-

Minimum

0.00

0.00

1.74

12.03

b) on trading

- Maximum 0.00 0.00 0.00 0.00 - Minimum 0.00 0.00 0.00 0.00

( in Crore)`

39.13 Exposures where the FI had exceeded the prudential exposure limits during the year: Nil (Previous Year - Nil)

196


39.14 Corporate Debt Restructuring: Nil (Previous Year-Nil)

39.15 Concentration of Deposits, Advances, Exposures and NPAs

1. Concentration of deposits

2010-11

Total Deposits of twenty largest depositors 61.69

Percentage of Deposits of twenty largest depositors to Total Deposits 24.81%

* Excluding deposits from banks under Rural Housing Fund

2. Concentration of Advances

Total Advances to twenty largest borrowers 19,549.60

Percentage of Advances to twenty largest borrowers to Total Advances 86.57%

3. Concentration of Exposures

Total Exposure to twenty largest borrowers /customers 20,704.42

Percentage of Exposure to twenty largest borrowers/customers to Total Exposure on borrowers/customers

83.83%

4. Concentration of NPAs

Total Exposure to top four NPA Accounts Nil

39.16 Sector-wise NPAs:

Sl.

No. Sector

Percentage of NPAs to Total

Advances in that Sector

1 Agriculture & Allied activities Nil

2 Industry (Micro & Small, Medium & Large) Nil

3 Services Nil

4 Per sonnel Loan Nil

Note: Bank's total exposure is towards housing sector and there is no NPA.

( in Crore)`

39.17 Movement of NPAs

Particulars Amount

Gross NPAs as on 01.07.2010 (Opening Balance) Nil

Additions (Fresh NPAs) during the year Nil

Sub -total (A) Nil

Less: Nil

(i) Upgradations Nil

(ii) Recoveries (excluding recoveries made from upgraded accounts) Nil

(iii) Write -offs Nil

Sub -total (B) Nil

Gross NPAs as on 30.06.2011 (Closing Balance) (A - B) Nil

( in Crore)`

197


39.18 Overseas Assets, NPAs and Revenue

Particulars Amount

Total Assets Nil

Total NPAs Nil

Total Revenue Nil

( in Crore)`

Schedule I to XV form an integral part of accounts.

Signatures on schedules I to XV for identification.






Directors






Membership No. 90723 New Delhi, September 6, 2011

39.19 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting Norms

( in Crore)`

Name of SPV

Domestic Overseas

NIL Nil

ANNEXURE

ANNUAL ACCOUNTS2010-11

(JULY, 2010 TO JUNE, 2011)(SPECIAL FUND)

200


(Slum Improvement andBalance Sheet







Directors


New Delhi, September 6, 2011


Previous Year ` in crore

Liabilities Current Year

( in Crore)`

61.82 1. Special Fund

(Slum Improvement and Low Cost Housing Fund) 61.82 2. Reserves:

33.43

(i) Special Reserve in terms of Section 36(1)(viii) of Income Tax Act, 1961 34.953.00 (ii) Investment Fluctuation Reserve 3.00

3. Profit & Loss Account: 194.90 Balance as per last Balance Sheet 204.63

9.73 Add: Profit transferred from the Profit and Loss A/c 17.92 222.55

4. Current Liabilities and Provisions: 56.06 (i) Provision for Income Tax 56.79

1.30 (ii) Provision for Standard Assets 1.30

7.61

(iii) Provision for Bad and Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act, 1961 8.66

0.00

(iv) Provision for diminution in the value of Restructured Accounts 0.02 66.77

11.02 5. Deferred Tax Liability 11.57

378.87 TOTAL 400.66

Profit & Loss Account


Expenditure Current Year

` in crore@ 1. Other Expenditure

0.00 2. Provision for Diminution in the Fair Value of Restructured Accounts

0.80 3. Provision for Bad and Doubtful Debts u/s 36(1)(viia)(c)

of Income Tax Act, 1961 1.20 4. Deferred Tax 5.80 5. Provision for Income Tax

6. Balance of Profit carried down- TOTAL

2.40 7. Transfer to Special Reserve in terms of Section 36(1)(viii)

of Income Tax Act, 1961 9.73 8. Balance carried to Balance Sheet

12.13 TOTAL

@0.02

1.050.556.51

19.44

27.57

1.5217.92

19.44

@Amount less than 0.50 ` lakhs

12 13.

19 93.

201


Current Year

Low Cost Housing Fund)

as at 30th

June, 2011


Assets

` in crore

1.

Cash and Bank Balances:

@ (i) Current Account @100.00

(ii) Term Deposit with Banks

50.00

50.00

2.

Investments(at cost or market value whichever is less):

136.40

Treasury Bills

70.51

3.

Loans & Advance:

102.88

Direct Lending

142.85

4.

Other Assets:

4.01

(i) Interest Receivable on Bank Deposits 2.45

0.69

(ii) Interest Receivable on Investments

1.01

20.78

(iii) Advance Tax and TDS

77.31

14.11

(iv) Amount Recoverable from General Fund

56.53

137.30

@Amount less than 0.50 lakhs

Notes forming part of Accounts1. Balance Sheet and Profit & Loss Account of Special Fund have been drawn in accordance with the provisions

of National Housing Bank (Slum Improvement and Low Cost Housing Fund) Regulation, 1993.2. NHB (Slum Improvement and Low Cost Housing Fund) represent 40% of the amounts deposited by any

person voluntarily in accordance with the NHB Voluntary Deposit Scheme (VDS).3. The Bank does not charge staff expense or other operating expense to Special Fund Account

As per our attached Report of even dateFor Aiyar & Co.

Chartered AccountantsFirm Regn. No. 001174N



`

8378. 7 TOTAL 6400. 6

for the year ended 30th

June, 2011

Previous Year Rs. in crore

Income Current Year Rs.

in crore

1. Interest on Loans and Advances and Bank Deposits :

(i) Loans and Advances

7.82

(ii) Bank Deposits

4.58

12.40

2.

Income from Investments

8.73

3. Profit on purchase and sale of Mutual Funds 0.66

4. Other Income 0.00

5. Provisions no longer required written back 5.78

TOTAL 27.57

7.58

7.88

3.48

0.99

@

0.00

19.93

12.13

6. Balance of Profit brought down 19.44

12.13 TOTAL 19.44

202


Senior Executives of National Housing Bank

R.S. GargExecutive Director


V.K. BadamiGeneral Manager

R.K. Pandey General Manager

annual report 2010-2011 - national housing...

Documents