NHB has been advocating reduction in stamp duty, registration charges for housing, says MD

Targeting a doubling of credit-linked subsidy to the deserving categories this year, National Housing Bank is encouraging stakeholders to set up housing finance companies (HFCs) with the objective of extending finance for affordable housing. Sriram Kalyanaraman, Managing Director and CEO, says that 11 HFCs were granted Certificate of Registration during 2015-16 (July 1 to June 30) to undertake housing finance business. In an interaction with BusinessLine , he outlined the bank’s promotional and development activities to strengthen the operating milieu of the housing finance sector as well as development of new products. . Excerpts:

Can you elaborate on the steps taken by the bank to improve access to affordable housing?

NHB provides refinance to banks and HFCs to promote affordable housing under multiple windows, such as general fund, rural housing fund, urban housing fund, and special urban housing refinance scheme for low-income households through World Bank credit arrangement.

The bank also has a tie-up with the UK’s Department for International Development (DFID) for a project called ‘Making affordable housing market for faster and sustained growth’ in eight low-income States in the country.

It has implemented a 24x7 online portal for claims submission by PLIs (primary lending institutions) and have also automated claims processing, resulting in minimal turnaround time for release of interest subsidy.

NHB has been advocating reduction in stamp duty and registration charges applicable for housing to improve affordability. It is associated with the Kerala Government for formulation of the State Housing Policy, and is also currently working with a few State governments to formulate such policies to provide a fillip to affordable housing.

Stamp duty is proving to be an irritant for several home-buyers. Have you taken any steps to reduce stamp duty?

Stamp duty and registration charges vary from State to State, and form a significant part of the overall acquisition cost for home-owners. The bank has urged Central and State governments to rationalise stamp duty and registration charges, in order to make EWS/LIG housing more affordable.

For this, the NHB has also commissioned a study on stamp duty and registration across major States to see how they vary from place to place, their impact on affordability, and suggest a revenue-neutral regime through rationalisation.

What is the progress on the plans to launch a rental index? What will be the main benefits of this index? Will it help house owners fix rentals accordingly?

NHB is currently revamping its Residex by shifting the base year to 2012 from 2007, and revising the segmentation used in the index. The bank has also proposed to introduce a few other indices, such as land price index and building materials price index, in a phased manner to provide a holistic view of the Housing Price Index to the stakeholders.

In addition, NHB also proposes to launch the Housing Rental Index from the data sourced from market participants in order to bring transparency in the rental market in the country through reference index.

It will act as a reference rate for stakeholders such as owners, tenants, and corporates, among others. Many households may benefit, especially in taking a decision on whether to reside in a rented house or to own a house.

Can you give details of your plans to raise funds for refinancing housing finance companies?

Under the India-UK bilateral development cooperation partnership, NHB has entered into a collaboration with DFID, which is providing a total assistance of £50 million for an affordable housing project.

Of this, £10 million (₹99 crore) was drawn in 2015-16. As on June 30, the outstanding borrowing from DFID was £29 million (₹264 crore after revaluation), which was hedged.

In 2013, the bank had entered into an agreement with World Bank, which was followed by a subsidiary loan agreement with the Union Government, for a low-income housing finance project of SDR 66.1 million ($100 million).

Under this line of credit, World Bank makes disbursements to the government, which in return on-lends the rupee equivalent to NHB.

How has NHB been able to avoid any NPAs?

NHB is a ‘nil’ net NPA (non-performing asset) development financial institution. As on March 30, the gross NPA was 0.09 per cent.

The bank lends only to eligible institutions and not to individuals. Its loans and advances include refinance and project finance, and it follows a rigorous appraisal process.

The due-diligence processes, apart from financial analysis, include awarding of internal credit rating, seeking references from other lenders, and undertaking its own market intelligence, among others.

The bank follows stringent risk-categorisation and asset-classification norms, and starts rigorous follow-up processes on the first-time bucket to recover maximum dues.

What steps are needed to make Real Estate Investment Trusts (REITs) a success in India?

REITs are a good investment vehicle for a country like India, which has huge unmet investment demand. It has the potential to pick up in the rental housing market as well.

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