NHB to revise housing loan schemes
Our Banking Bureau
3 November 2001

Mumbai: The National Housing Bank (NHB), the refinancing agency for housing finance companies, proposes to increase the loan period for housing loans.

Presently, the maximum loan period under which the NHB refinances is 10 years - this will be increased to 25 years. The down payment, which is currently 30 per cent of the total cost of the house, will also be brought down to 5 per cent.

NHB will also be introducing a mortgage credit guarantee scheme for the Indian market. The scheme will protect lending institutions against any default by their borrowers. “The purpose is to enable primary lending institutions to lend more widely, apply more reasonable standards, not be too conservative and lend in all segments of the population and all parts of the country,” NHB executive director RV Verma said.

The scheme will be launched through a new subsidiary of the NHB, a 51:49 per cent joint venture with the Canada Mortgage and Housing Corporation. The proposed subsidiary will have an initial capital of Rs 100 crore and will be set up by April 2002.

“The housing sector has to be put on a fast-forward mode to compete with other sectors. To achieve that, appropriate institution building, in tune with the best global practices, has to be adopted. Ours is an initiative in that direction,” Verma said.

NHB’s proposal has been placed before Finance Minister Yashwant Sinha, who has accorded an in-principle approval to the proposal.

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