Overview

As per section 29A of the National Housing Bank Act, 1987, it is mandatory for every proposed housing finance organization to secure certification of nomination from NHB before undertaking activities in the housing finance sector.

For registration of a housing finance company, you can contact Corpb as it has documented various applications with NHB for HFC permits.

HFCs cannot lead the business of registration of funds without obtaining a Certificate of Registration (Core) from NHB. Leading a business without announcing promotion is an offense under the National Housing Bank Act, 1987. NHB may apply documents to abolish the same HFCs under section 33B of the said Act.]

About the Housing Finance Company

Housing finance company is a type of non-banking financial company (NBFC), which is the & quot; Development or financing of homes includes financing; & quot; For the most part, housing finance companies are those types of organizations that have the primary purpose of paying for housing, whether directly or directly. They are controlled by the National Housing Bank (NHB).

Regulatory

In the housing finance sector, NBH considers it the most important work. In relation to debt and capital market inclusion, the housing finance sector in India has entered a second period of reform.

As far as resource development is concerned, in order to maintain its legitimacy and dependability, the strategy of housing finance sector in the nation improves and the foundation works, NHB put in place a viable system of responsive guidelines. is. The objective behind this is to reverse the approach of the free market.

For housing finance companies, NHB has come up with a set of guidelines for reference;

• financial support;
• Prudential norms for income recognition;
• Asset Classification;
• Regulating activity of deposits, etc.

  There is a need to synchronize between Government, Reserve Bank of India (RBI) and National Housing Bank (NHB) for the purpose of catalyzing this sector.

• RBI regulates – lending to the housing by Banks
• NHB regulates - lending to the housing by HFCs

Basic requirements

• In India, housing finance companies are guided by the National Housing Bank (NHB). As per section 29A of the National Housing Bank Act, 1987, no HFC shall complete or initiate a housing finance case without condition. &Ndash;
• An organization should be listed under the Companies Act, 2013/1956 and who is eager to start talking about housing finance for the community at large;
• In any structure, the main objective should be to provide housing loan or housing finance, validly or indirectly;
• There are at least net reserves of INR 10 crores;

Required Documents

• Certified copy of MOA (Memorandum of Association) and AOA (Association of Associations);
• Request draft of Rs. 10,000 / - for NHB, New Delhi;
• The board resolution reflects the company's goals and approves the application to be recorded before the NHB;
• Certificate issued by professionals related to meeting the minimum NOF (Net Owned Fund) criteria of Rs 10 crore.;
• Company’s business plan for the next three years;
• Company Profile;
• Business profile of MD / Directors / CEO etc.;
• Financial Account for the last three years, if available;
• Experience certificate of employees and directors;
• Description of the company to which the directors are associated;

Registration Process

For housing finance company registration, an applicant organization is required to give a physical copy of the application along with important documents that are referred to above the head office. "National Housing Bank" With a demand draft of INR 10,000 / - payable to National Housing Bank in New Delhi. Our team of master experts can support you and simplify the process for you.

Some important fetures related to license

When the registration application is submitted, NHB (National Housing Board) will review the application and according to sub-section (4) of section 29A of NHB Act, 1987, proof of registration after proper background verification and satisfaction of the following conditions Will provide the letter. :

• HFCs should be in a position to pay their current and future depositors whenever their claim comes up.
• The housing finance company should not conduct business matters that would interfere with the interests of its present or future depositors.
• Ensure that HFCs have adequate capital structure and better income prospects.
• It is the responsibility of the HFC to serve the public interest upon attaining the certification of registration.

Certain other conditions in the NHB's assessment, satisfaction of which, will be important to guarantee that the responsibility of HFC to start or carry on business in India will not be biased keeping in mind the interest of the depositors.

Different between from housing finance companies and banks

The activities of banks and HFCs are similar, as both are related to lending and undertaking, although there are some pairs to the contrary:

• HFC cannot accept request store;
• HFCs do not frame parts of the payment and settlement system and cannot pass checks drawn on themselves;
• Unlike banks, the deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not accessible to HFC contributors.

Cancellation terms

NHB has the authority to revoke the certificate of registration issued to a housing finance company in certain cases when such HFCs were not in conformity with the instructions given by the NHB or NHB Act.  

Cancellation is subject to certain provisions, if such company

• Works to advance the business of finance in India
• In the case, HFC has failed to follow the terms and conditions provided by NHB
• Follow the instructions given by the National Housing Bank under the provision of Chapter V of the National Housing Bank Act 1987; Or
• To keep accounts as per the requirement of any law or any course or request given by National Housing Bank under the arrangement of Chapter V of National Housing Bank Act 1987; Or
• Mandatory to submit your books of records and other relevant documents as per NHB Act, when it is requested by an examination authority of National Housing Bank; Or
• Under the arrangement of this Chapter V of the National Housing Bank Act, 1987, the request made by the National Housing Bank has been barred from accepting deposits and such request has been in power for at least 3 months. .

Post-incorporation formalities

On obtaining the certificate of registration, the following are the formalities that a housing finance company has to fulfill for smooth functioning:

• Updates to loan procedures
• Updation to loan policies including evaluation techniques and tools
• Development in IT infrastructure
• Board Structure
• Product Development
• drafting policies and organizational structure
• Resource Mobilization
• Legal proceedings
• scoring model
• MIS format
• NHB Regulatory and Compliance Requirements
• Credit Risk Management

Mandatory Complaints

• Each HFC is required to file annual returns, half-yearly returns, and quarterly returns in relation to prudential standards, respectively, to maintain liquid assets;
• Presentation of auditor's annual statement’sThe certificate confirms the HFC's ability to repay deposits;
• A copy of the budget report and annual report;
• Documenting a copy of a public deposit or publicity request in its place.
• HFCs must comply with the IND-AS provisions.
• Net Owned Fund Requirement for Housing Finance Company Registration

The set of equity share capital and free reserves paid as stated in the latest balance sheet of the housing finance company after deducting the following:

• Accumulated loss;
• deferred revenue expenditure;
• Other intangible assets.

Even less than the amounts representing the investment of such companies in forward shares:

• its subsidiaries;
• Companies in the same group;
• All other HFCs which are companies; And

The book value of debentures, bonds, outstanding loans and advances (including rent-to-purchase and lease finance) is created and credited with the following:

• Subsidiaries of such company; And
• Companies in the same group, such amount is more than ten percent above;

Market size

Compared to banks, housing finance companies have given much better returns. Let’s understand by taking an example:

• During April 2013- Dewan Housing Finance's share price jumped by over 550%.
• In the same period, Repo Home Finance, LIC Housing, and HDFC rose 140–260%.
• Whereas IndusInd Bank NSE-1.05%, Yes Bank NSE-1.05%, Kotak Mahindra Bank NSE 1.16%, HDFC Bank NSE 0.26%, Federal Bank and Axis Bank NSE 1.47% picked up between 100-380%