The National Housing Bank Act, 1987
Administered Ministry: Ministry of Finance / Department of Financial Services
Section
Section 18A Exemption from registration.
1[18A. Exemption from registration.-- Notwithstanding anything contained in sub-section (1) of section 17 of the Registration Act, 1908 (16 of 1908),--
(a) any instrument in the form of debt obligations or trust certificate of beneficial interest or other instruments, by whatever name called, issued by the National Housing Bank to securities the loans granted by the housing finance institutions and scheduled banks, and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to an undivided interest afforded by a registered instrument, whereby the National Housing Bank has acquired the rights and interests in relation to such loans and in securities therefor; or
(b) any transfer of such instruments referred to in clause (a),
shall not require compulsory registration.]
(a) any instrument in the form of debt obligations or trust certificate of beneficial interest or other instruments, by whatever name called, issued by the National Housing Bank to securities the loans granted by the housing finance institutions and scheduled banks, and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to an undivided interest afforded by a registered instrument, whereby the National Housing Bank has acquired the rights and interests in relation to such loans and in securities therefor; or
(b) any transfer of such instruments referred to in clause (a),
shall not require compulsory registration.]
1. Ins. by s. 11, ibid. (w.e.f. 12-6-2000).
Section 18B Recovery of dues as arrears of land revenue.
1[18B. Recovery of dues as arrears of land revenue.--Where any amount is due under an agreement to the National Housing Bank, whether acting as a trustee or otherwise, in respect of securitisation of loans of housing finance institutions and scheduled banks, the National Housing Bank may without prejudice to any other mode of recovery make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied that any amount is due, it may issue a certificate for the amount to the Collector and the Collector shall proceed to recover that amount in the same manner as arrears of land revenue.]
1. Ins. by s. 11, ibid. (w.e.f. 12-6-2000).
Section 19 Power to impose conditions for accommodation.
In entering into any transaction under this Chapter with any borrowing 1[institution], the National Housing Bank may impose such conditions as it may think necessary or expedient for protecting the interests of the National Housing Bank.
1. Subs. by s. 12, ibid., for "housing finance institution" (w.e.f. 12-6-2000).
Section 20 Power to call for repayment before agreed period.
Notwithstanding anything to the contrary contained in any agreement, the National Housing Bank may, by notice in writing, require any borrowing 1[institution] to discharge forthwith in full its liabilities to the National Housing Bank--
(a) if it appears to the Board that false or misleading information in any material particular was given in the application for the loan or advance; or
(b) if the borrowing 1[institution] has failed to comply with any of the terms of the agreement with the National Housing Bank in the matter of the loan or advance; or
(c) if there is a reasonable apprehension that the borrowing 1[institution] is unable to pay its debts or that proceedings for liquidation may be commenced in respect thereof; or
(d) if for any reason, it is necessary so to do to protect the interests of the National Housing Bank.
(a) if it appears to the Board that false or misleading information in any material particular was given in the application for the loan or advance; or
(b) if the borrowing 1[institution] has failed to comply with any of the terms of the agreement with the National Housing Bank in the matter of the loan or advance; or
(c) if there is a reasonable apprehension that the borrowing 1[institution] is unable to pay its debts or that proceedings for liquidation may be commenced in respect thereof; or
(d) if for any reason, it is necessary so to do to protect the interests of the National Housing Bank.
1. Subs. by Act 15 of 2000, s. 12, for "housing finance institution" (w.e.f. 12-6-2000).
Section 21 National Housing Bank to have access to records.
(1) The National Housing Bank shall have free access to all such records of any 1[institution] which seeks to avail of any credit facilities from the National Housing Bank and to all such records of any person who seeks to avail of any credit facilities from such 1[institution], the perusal of which may appear to the national Housing Bank to be necessary in connection with the providing of finance or other assistance to such 1[institution] or the refinancing of any loan or advance made to such person by that 1[institution].
(2) The National Housing Bank may require any institution or person referred to in sub-section (1), to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition.
(2) The National Housing Bank may require any institution or person referred to in sub-section (1), to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition.
1. Subs. by Act 15 of 2000, s. 12, for "housing finance institution" (w.e.f. 12-6-2000).
Section 22 Validity of loan or advance not to be questioned.
Notwithstanding anything to the contrary contained in any other law for the time being in force, the validity of any loan or advance made by the National Housing Bank in pursuance of the provisions of this Act shall not be called in question merely on the ground of non-compliance with the requirements of such other law or of any resolution, contract, or any instrument regulating the constitution of the borrowing 1[institution]:
Provided that nothing in this section shall enable any company or co-operative society to obtain any loan or advance where the instrument relating to the constitution of such company or co-operative society does not empower such company or co-operative society so to do.
Provided that nothing in this section shall enable any company or co-operative society to obtain any loan or advance where the instrument relating to the constitution of such company or co-operative society does not empower such company or co-operative society so to do.
1. Subs. by Act 15 of 2000, s. 12, for "housing finance institution" (w.e.f. 12-6-2000).
Section 23 National Housing Bank not to make loans or advances against its own bonds or debentures.
The National Housing Bank shall not make any loan or advance on the security of its own bonds or debentures.
Section 24 Power to inspect.
(1) The National Housing Bank may at any time and shall, on being directed so to do by the Reserve Bank, cause an inspection to be made by one or more of its officers of any 1[institution] to which the National Housing Bank has made any loan or advance or granted any other financial assistance, and its books, accounts and other documents; and the National Housing Bank shall supply to the 1[institution] a copy of its report on such inspection.
(2) It shall be the duty of every officer, employee or other person or persons incharge of the whole or part of the affairs of the 1[institution] to produce to any officer making an inspection under subsection (1), all such books, accounts and other documents in his custody or power and to furnish within such time as the said officer may specify, any statements, information relating to the affairs of the 1[institution] as the said officer may require of him.
(2) It shall be the duty of every officer, employee or other person or persons incharge of the whole or part of the affairs of the 1[institution] to produce to any officer making an inspection under subsection (1), all such books, accounts and other documents in his custody or power and to furnish within such time as the said officer may specify, any statements, information relating to the affairs of the 1[institution] as the said officer may require of him.
1. Subs. by Act 15 of 2000, s. 12, for "housing finance institution" (w.e.f. 12-6-2000).
Section 25 Power to collect credit information.
(1) The National Housing Bank may, for the purpose of the efficient discharge of its functions under this Act, at any time direct any 1[institution] to submit to it credit information in such form and within such time as may be specified by the National Housing Bank from time to time.
(2) Every 1[institution] shall, notwithstanding anything to the contrary contained in any law for the time being in force or in any instrument regulating the constitution thereof or in any agreement executed by it, relating to the secrecy of its dealings with its constituents, be bound to comply with any directions issued under sub-section (1).
(3) The National Housing Bank may, for the purpose of the efficient discharge of its functions under this Act collect from the Central and State Governments, local authorities, the Reserve Bank, any bank or such financial or other institutions as the Reserve Bank may specify in this behalf, credit information or other information.
Explanation.--For the purposes of this section and section 26, credit information means any information relating to--
(i) the amount of loans and advances and other credit facilities granted for the purpose of housing;
(ii) the nature of security taken for such loans, advances or other credit facilities;
(iii) the guarantees furnished; and
(iv) any other information which has a bearing on the credit-worthiness of the borrower.
(2) Every 1[institution] shall, notwithstanding anything to the contrary contained in any law for the time being in force or in any instrument regulating the constitution thereof or in any agreement executed by it, relating to the secrecy of its dealings with its constituents, be bound to comply with any directions issued under sub-section (1).
(3) The National Housing Bank may, for the purpose of the efficient discharge of its functions under this Act collect from the Central and State Governments, local authorities, the Reserve Bank, any bank or such financial or other institutions as the Reserve Bank may specify in this behalf, credit information or other information.
Explanation.--For the purposes of this section and section 26, credit information means any information relating to--
(i) the amount of loans and advances and other credit facilities granted for the purpose of housing;
(ii) the nature of security taken for such loans, advances or other credit facilities;
(iii) the guarantees furnished; and
(iv) any other information which has a bearing on the credit-worthiness of the borrower.
1. Subs. by Act 15 of 2000, s. 12, for "housing finance institution" (w.e.f. 12-6-2000).
Section 26 Power to publish information.
The National Housing Bank, if it considers it in the public interest so to do, may publish any credit information or other information obtained by it under this Act, in such consolidated form or in any other form as it thinks fit.
Section 27 Advisory services.
The National Housing Bank may provide advisory services to the Central and State Governments, local authorities and other agencies connected with housing, in respect of--
(a) formulation of overall policies aimed at promoting the growth of housing and housing finance institutions;
(b) legislation relating to matters having a bearing on shelter, housing and human settlement.
(a) formulation of overall policies aimed at promoting the growth of housing and housing finance institutions;
(b) legislation relating to matters having a bearing on shelter, housing and human settlement.
Section 28 Definition of deposit.
In this Chapter the term 'deposit' shall have the meaning assigned to it in section 45I of the Reserve Bank of India Act, 1934 (2 of 1934).
Section 29 Chapter not to apply in certain cases.
(1) The provisions of this Chapter shall not apply to deposits accepted by a housing finance institution which is a firm or an unincorporated association of individuals.
(2) For the removal of doubts, it is hereby declared that the firms and unincorporated associations of individuals referred to in sub-section (1) shall continue to be governed by the provisions of Chapter IIIC of the Reserve Bank of India Act, 1934 (2 of 1934).
(2) For the removal of doubts, it is hereby declared that the firms and unincorporated associations of individuals referred to in sub-section (1) shall continue to be governed by the provisions of Chapter IIIC of the Reserve Bank of India Act, 1934 (2 of 1934).
Section 29A Requirement of registration and net owned fund.
1[29A. Requirement of registration and net owned fund.-- 2[(1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no housing finance institution which is a company shall commence housing finance as its principal business or carry on the business of housing finance as its principal business without--
(a) obtaining a certificate of registration issued under this Chapter; and
(b) having the net owned fund of ten crore rupees or such other higher amount, as the Reserve Bank may, by notification, specify.
(2) Every housing finance institution which is a company shall make an application for registration to the Reserve Bank in such form as may be specified by the Reserve Bank:
Provided that an application made by a housing finance institution which is a company to the National Housing Bank and pending for consideration with the National Housing Bank as on the date of commencement of the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019, shall stand transferred to the Reserve Bank and thereupon the application shall be deemed to have been made under the provisions of this sub-section and shall be dealt with accordingly:
Provided further that the provisions of this sub-section shall not apply to the housing finance institution which is a company and having a valid registration certificate granted under sub-section (5) on the date of commencement of the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019, and such housing finance institution shall be deemed to have been granted a certificate of registration under the provision of this Act.]
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(4) The 4[Reserve Bank], for the purpose of considering the application for registration, may require to be satisfied by an inspection of the books of such housing finance institution or otherwise that the following conditions are fulfilled:--
(a) that housing finance institution is or shall be in a position to pay its present or future depositors in full as and when their claims accrue;
(b) that the affairs of the housing finance institution are not being or are not likely to be conducted in a manner detrimental to the interest of its present or future depositors;
(c) that the general character of the management or the proposed management of the housing finance institution shall not be prejudicial to the public interest or the interests of its depositors;
(d) that the housing finance institution has adequate capital structure and earning prospects;
(e) that the public interest shall be served by the grant of certificate of registration to the housing finance institution to commence or to carry on the business in India;
(f) that the grant of certificate of registration shall not be prejudicial to the operation and growth of the housing finance sector of the country; and
(g) any other condition, fulfilment of which in the opinion of the 4[Reserve Bank], shall be necessary to ensure that the commencement of or carrying on the business in India by a housing finance institution shall not be prejudicial to the public interest or in the interests of the depositors.
5[Provided that the Reserve Bank may, wherever it considers necessary so to do, require the National Housing Bank to inspect the books of such housing finance institution and submit a report to the Reserve Bank for the purpose of considering the application.]
(5) The 4[Reserve Bank] may, after being satisfied that the conditions specified in sub-section (4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose.
(6) The 4[Reserve Bank] may cancel a certificate of registration granted to a housing finance institution under this section if such institution--
(i) ceases to carry on the business of a housing finance institution in India; or
(ii) has failed to comply with any condition subject to which the certificate of registration had been issued to it; or
(iii) at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (4); or
(iv) fails--
(a) to comply with any direction issued by the 6[Reserve bank or the National Housing Bank] under the provisions of this Chapter; or
(b) to maintain accounts in accordance with the requirement of any law or any direction or order issued by the 6[Reserve bank or the National Housing Bank] under the provisions of this Chapter; or
(c) to submit or offer for inspection its books of account and other relevant documents when so demanded by an inspecting authority of the 6[Reserve bank or the National Housing Bank]; or
(v) has been prohibited from accepting deposit by an order made by the National Housing Bank under the provisions of this Chapter and such order has been in force for a period of not less than three months:
Provided that before cancelling a certificate of registration on the ground that the 7[housing finance institution which is a company] has failed to comply with the provisions of clause (ii) or has failed to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (4), the 8[Reserve Bank], unless it is of the opinion that the delay in cancelling the certificate of registration shall be prejudicial to public interest or the interest of the depositors or the 7[housing finance institution which is a company], shall give an opportunity to such institution on such terms as the 8[Reserve Bank] may specify for taking necessary steps to comply with such provision or fulfilment of such condition:
Provided further that before making any order of cancellation of certificate of registration, such institution shall be given a reasonable opportunity of being heard.
(7) A housing finance institution aggrieved by the order or rejection of application for registration or cancellation of certificate of registration may prefer an appeal, within a period of thirty days from the date on which such order of rejection or cancellation is communicated to it, to the Central Government and the decision of the Central Government where an appeal has been preferred to it, or of the 8[Reserve Bank] where no appeal has been preferred, shall be final:
Provided that before making any order of rejection of appeal, such institution shall be given a reasonable opportunity of being heard.
Explanation.-- For the purposes of this section,--
(I) "net owned fund" means--
(a) the aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance-sheet of the housing finance institution after deducting therefrom--
(i) accumulated balance of loss;
(ii) deferred revenue expenditure; and
(iii) other intangible assets; and
(b) further reduced by the amounts representing--
(1) investments of such institution in shares of--
(i) its subsidiaries;
(ii) companies in the same group;
9[(iii) all other housing finance companies; and]
(2) the book value of debentures, bonds, outstanding loans and advances (including hire-purchase and lease finance) made to, and deposits with,--
(i) subsidiaries of such company; and
(ii) companies in the same group, to the extent such amount exceeds ten per cent. of (a) above;
10[(II) the expressions subsidiaries and companies in the same group shall have the meanings respectively assigned to them in the Companies Act, 2013 (18 of 2013):
Provided that the National Housing Bank shall, in consultation with the Reserve Bank, specify the companies to be deemed to be in the same group.]
(a) obtaining a certificate of registration issued under this Chapter; and
(b) having the net owned fund of ten crore rupees or such other higher amount, as the Reserve Bank may, by notification, specify.
(2) Every housing finance institution which is a company shall make an application for registration to the Reserve Bank in such form as may be specified by the Reserve Bank:
Provided that an application made by a housing finance institution which is a company to the National Housing Bank and pending for consideration with the National Housing Bank as on the date of commencement of the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019, shall stand transferred to the Reserve Bank and thereupon the application shall be deemed to have been made under the provisions of this sub-section and shall be dealt with accordingly:
Provided further that the provisions of this sub-section shall not apply to the housing finance institution which is a company and having a valid registration certificate granted under sub-section (5) on the date of commencement of the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019, and such housing finance institution shall be deemed to have been granted a certificate of registration under the provision of this Act.]
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(4) The 4[Reserve Bank], for the purpose of considering the application for registration, may require to be satisfied by an inspection of the books of such housing finance institution or otherwise that the following conditions are fulfilled:--
(a) that housing finance institution is or shall be in a position to pay its present or future depositors in full as and when their claims accrue;
(b) that the affairs of the housing finance institution are not being or are not likely to be conducted in a manner detrimental to the interest of its present or future depositors;
(c) that the general character of the management or the proposed management of the housing finance institution shall not be prejudicial to the public interest or the interests of its depositors;
(d) that the housing finance institution has adequate capital structure and earning prospects;
(e) that the public interest shall be served by the grant of certificate of registration to the housing finance institution to commence or to carry on the business in India;
(f) that the grant of certificate of registration shall not be prejudicial to the operation and growth of the housing finance sector of the country; and
(g) any other condition, fulfilment of which in the opinion of the 4[Reserve Bank], shall be necessary to ensure that the commencement of or carrying on the business in India by a housing finance institution shall not be prejudicial to the public interest or in the interests of the depositors.
5[Provided that the Reserve Bank may, wherever it considers necessary so to do, require the National Housing Bank to inspect the books of such housing finance institution and submit a report to the Reserve Bank for the purpose of considering the application.]
(5) The 4[Reserve Bank] may, after being satisfied that the conditions specified in sub-section (4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose.
(6) The 4[Reserve Bank] may cancel a certificate of registration granted to a housing finance institution under this section if such institution--
(i) ceases to carry on the business of a housing finance institution in India; or
(ii) has failed to comply with any condition subject to which the certificate of registration had been issued to it; or
(iii) at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (4); or
(iv) fails--
(a) to comply with any direction issued by the 6[Reserve bank or the National Housing Bank] under the provisions of this Chapter; or
(b) to maintain accounts in accordance with the requirement of any law or any direction or order issued by the 6[Reserve bank or the National Housing Bank] under the provisions of this Chapter; or
(c) to submit or offer for inspection its books of account and other relevant documents when so demanded by an inspecting authority of the 6[Reserve bank or the National Housing Bank]; or
(v) has been prohibited from accepting deposit by an order made by the National Housing Bank under the provisions of this Chapter and such order has been in force for a period of not less than three months:
Provided that before cancelling a certificate of registration on the ground that the 7[housing finance institution which is a company] has failed to comply with the provisions of clause (ii) or has failed to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (4), the 8[Reserve Bank], unless it is of the opinion that the delay in cancelling the certificate of registration shall be prejudicial to public interest or the interest of the depositors or the 7[housing finance institution which is a company], shall give an opportunity to such institution on such terms as the 8[Reserve Bank] may specify for taking necessary steps to comply with such provision or fulfilment of such condition:
Provided further that before making any order of cancellation of certificate of registration, such institution shall be given a reasonable opportunity of being heard.
(7) A housing finance institution aggrieved by the order or rejection of application for registration or cancellation of certificate of registration may prefer an appeal, within a period of thirty days from the date on which such order of rejection or cancellation is communicated to it, to the Central Government and the decision of the Central Government where an appeal has been preferred to it, or of the 8[Reserve Bank] where no appeal has been preferred, shall be final:
Provided that before making any order of rejection of appeal, such institution shall be given a reasonable opportunity of being heard.
Explanation.-- For the purposes of this section,--
(I) "net owned fund" means--
(a) the aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance-sheet of the housing finance institution after deducting therefrom--
(i) accumulated balance of loss;
(ii) deferred revenue expenditure; and
(iii) other intangible assets; and
(b) further reduced by the amounts representing--
(1) investments of such institution in shares of--
(i) its subsidiaries;
(ii) companies in the same group;
9[(iii) all other housing finance companies; and]
(2) the book value of debentures, bonds, outstanding loans and advances (including hire-purchase and lease finance) made to, and deposits with,--
(i) subsidiaries of such company; and
(ii) companies in the same group, to the extent such amount exceeds ten per cent. of (a) above;
10[(II) the expressions subsidiaries and companies in the same group shall have the meanings respectively assigned to them in the Companies Act, 2013 (18 of 2013):
Provided that the National Housing Bank shall, in consultation with the Reserve Bank, specify the companies to be deemed to be in the same group.]
1. Ins. by Act 15 of 2000, s. 13 (w.e.f. 12-6-2000).
2. Subs. by Act 23 of 2019, s. 154, for sub-sections (1) and (2) (w.e.f. 09-08-2019).
3. Sub-section (3) omitted by Act 23 of 2019, s. 154 (w.e.f. 09-08-2019).
4. Subs. by s. 154, ibid., for "National Housing Bank" (w.e.f. 09-08-2019).
5. Ins. by s. 154, ibid. (w.e.f. 09-08-2019).
6. Subs. by Act 23 of 2019, s. 154, for "National Housing Bank" (w.e.f. 09-08-2019).
7. Subs. by Act 23 of 2019, s. 154, for "housing finance institution" (w.e.f. 09-08-2019).
8. Subs. by s. 154, ibid., for "National Housing Bank" (w.e.f. 09-08-2019).
9. Subs. by s. 154, ibid., for sub-item (iii) (w.e.f. 09-08-2019).
10. Subs. by s. 154, ibid., for clause (II) (w.e.f. 09-08-2019).
2. Subs. by Act 23 of 2019, s. 154, for sub-sections (1) and (2) (w.e.f. 09-08-2019).
3. Sub-section (3) omitted by Act 23 of 2019, s. 154 (w.e.f. 09-08-2019).
4. Subs. by s. 154, ibid., for "National Housing Bank" (w.e.f. 09-08-2019).
5. Ins. by s. 154, ibid. (w.e.f. 09-08-2019).
6. Subs. by Act 23 of 2019, s. 154, for "National Housing Bank" (w.e.f. 09-08-2019).
7. Subs. by Act 23 of 2019, s. 154, for "housing finance institution" (w.e.f. 09-08-2019).
8. Subs. by s. 154, ibid., for "National Housing Bank" (w.e.f. 09-08-2019).
9. Subs. by s. 154, ibid., for sub-item (iii) (w.e.f. 09-08-2019).
10. Subs. by s. 154, ibid., for clause (II) (w.e.f. 09-08-2019).
Section 29B Maintenance of percentage of assets.
1[29B. Maintenance of percentage of assets.-- (1) Every 2[housing finance institution] shall invest and continue to invest in India in unencumbered approved securities, valued at a price not exceeding the current market price of such securities, an amount which, at the close of business on any day, shall not be less than five per cent. or such higher percentage not exceeding twenty-five per cent. as the 3[Reserve Bank] may, from time to time and by notification, specify, of the deposits outstanding at the close of business on the last working day of the second preceding quarter.
(2) Every housing finance institution shall maintain in India in an account with a scheduled bank in term deposits or certificate of deposits (free of charge or lien) or in deposits with the National Housing Bank or by way of subscription to the bonds issued by the National Housing Bank, or partly in such account or in such deposit or partly by way of such subscription, a sum which, at the close of business on any day, together with the investment made under sub-section (1) shall not be less than ten per cent. or 4[such higher percentage not exceeding twenty-five per cent., as the Reserve Bank may], from time to time and by notification specify, of the deposits outstanding in the books of the housing finance institution at the close of business on the last working day of the second preceding quarter.
(3) For the purpose of ensuring compliance with the provisions of this section, the 3[Reserve Bank] may require every such housing finance institution to furnish a return to it in such form, in such a manner and for such period as may be specified by the 3[Reserve Bank].
(4) If the amount invested by a housing finance institution at the close of business on any day is less than the rate specified under sub-section (1) or sub-section (2), such housing finance institution shall be liable to pay to the National Housing Bank, in respect of such shortfall, a penal interest at a rate of three per cent. per annum above the bank rate on such amount by which the amount actually maintained or invested falls short of the specified percentage, and where the shortfall continues in the subsequent quarters, the rate of penal interest shall be five per cent. per annum above the bank rate on such shortfall for each subsequent quarter.
(5) (a) The penal interest payable under sub-section (4) shall be payable within a period of fourteen days from the date on which a notice issued by the National Housing Bank demanding payment of the same is served on the housing finance institution and, in the event of a failure of the housing finance institution to pay the same within such period, may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting housing finance institution is situated and such direction shall be made only upon and application made in this behalf to the court by the National Housing Bank; and
(b) When the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the housing finance institution and every such certificate shall be enforceable in the manner as if it were a decree made by the court in a suit.
(6) Notwithstanding anything contained in this section, if the National Housing Bank is satisfied that the defaulting housing finance institution had sufficient cause for its failure to comply with the provisions of sub-section (1) or sub-section (2), it may not demand the payment of the penal interest. Explanation.-- For the purposes of this section,--
(i) approved securities means securities of any State Government or of the Central Government and such bonds, both the principal whereof and the interest whereon shall have been fully and unconditionally guaranteed by any such Government;
(ii) unencumbered approved securities includes the approved securities lodged by the housing finance institution with another institution for an advance or any other arrangement to the extent to which such securities have not been drawn against or availed of or encumbered in any manner;
(iii) quarter means the period of three months ending on the last day of March, June, September or December.]
(2) Every housing finance institution shall maintain in India in an account with a scheduled bank in term deposits or certificate of deposits (free of charge or lien) or in deposits with the National Housing Bank or by way of subscription to the bonds issued by the National Housing Bank, or partly in such account or in such deposit or partly by way of such subscription, a sum which, at the close of business on any day, together with the investment made under sub-section (1) shall not be less than ten per cent. or 4[such higher percentage not exceeding twenty-five per cent., as the Reserve Bank may], from time to time and by notification specify, of the deposits outstanding in the books of the housing finance institution at the close of business on the last working day of the second preceding quarter.
(3) For the purpose of ensuring compliance with the provisions of this section, the 3[Reserve Bank] may require every such housing finance institution to furnish a return to it in such form, in such a manner and for such period as may be specified by the 3[Reserve Bank].
(4) If the amount invested by a housing finance institution at the close of business on any day is less than the rate specified under sub-section (1) or sub-section (2), such housing finance institution shall be liable to pay to the National Housing Bank, in respect of such shortfall, a penal interest at a rate of three per cent. per annum above the bank rate on such amount by which the amount actually maintained or invested falls short of the specified percentage, and where the shortfall continues in the subsequent quarters, the rate of penal interest shall be five per cent. per annum above the bank rate on such shortfall for each subsequent quarter.
(5) (a) The penal interest payable under sub-section (4) shall be payable within a period of fourteen days from the date on which a notice issued by the National Housing Bank demanding payment of the same is served on the housing finance institution and, in the event of a failure of the housing finance institution to pay the same within such period, may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting housing finance institution is situated and such direction shall be made only upon and application made in this behalf to the court by the National Housing Bank; and
(b) When the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the housing finance institution and every such certificate shall be enforceable in the manner as if it were a decree made by the court in a suit.
(6) Notwithstanding anything contained in this section, if the National Housing Bank is satisfied that the defaulting housing finance institution had sufficient cause for its failure to comply with the provisions of sub-section (1) or sub-section (2), it may not demand the payment of the penal interest. Explanation.-- For the purposes of this section,--
(i) approved securities means securities of any State Government or of the Central Government and such bonds, both the principal whereof and the interest whereon shall have been fully and unconditionally guaranteed by any such Government;
(ii) unencumbered approved securities includes the approved securities lodged by the housing finance institution with another institution for an advance or any other arrangement to the extent to which such securities have not been drawn against or availed of or encumbered in any manner;
(iii) quarter means the period of three months ending on the last day of March, June, September or December.]
1. Ins. by Act 15 of 2000, s. 13 (w.e.f. 12-6-2000).
2. Subs. by s. 155, ibid., for "housing finance institution" (w.e.f. 09-08-2019).
3. Subs. by Act 23 of 2019, s. 155, for "National Housing Bank" (w.e.f. 09-08-2019).
4. Subs. by s. 155, ibid., for "such higher percentage not exceeding twenty-five per cent., as the National Housing Bank may" (w.e.f. 09-08-2019).
2. Subs. by s. 155, ibid., for "housing finance institution" (w.e.f. 09-08-2019).
3. Subs. by Act 23 of 2019, s. 155, for "National Housing Bank" (w.e.f. 09-08-2019).
4. Subs. by s. 155, ibid., for "such higher percentage not exceeding twenty-five per cent., as the National Housing Bank may" (w.e.f. 09-08-2019).
Section 29C Reserve fund.
1[29C. Reserve fund.-- (1) Every housing finance institution which is a company shall create a reserve fund and transfer therein a sum not less than twenty per cent. of its net profit every year as disclosed in the profit and loss account and before any dividend is declared.
Explanation.-- A housing finance institution creating and maintaining any special reserve in terms of clause (viii) of sub-section (1) of section 36 of the Income-tax Act, 1961 (43 of 1961), may take into account any sum transferred by it for the year to such special reserve for the purposes of this sub-section.
(2) No appropriation of any sum from the reserve fund including any sum in the special reserve which has been taken into account for the purposes of reserve fund in terms of sub-section (1), shall be made by such housing finance institution except for the purpose as may be 2[specified by the Reserve Bank] from time to time and every such appropriation shall be 3[reported to the National Housing Bank and the Reserve Bank] within twenty-one days from the date of such withdrawal:
4[Provided that the National Housing Bank or the reserve Bank] may, in any particular case and for sufficient cause being shown, extend the period of twenty-one days by such further period as it thinks fit or condone any delay in making such report.
(3) Notwithstanding anything contained in sub-section (1), the Central Government may, on the recommendation of 5[the Reserve Bank] and having regard to the adequacy of the paid-up capital and reserves of a housing finance institution which is a company in relation to its deposit liabilities, declare by order in writing that the provisions of sub-section (1) shall not be applicable to such housing finance institution for such period as may be specified in the order:
Provided that no such order shall be made unless the amount in the reserve fund under sub-section (1), together with the amount in the share premium account, is not less than the paid-up capital of the housing finance institution.]
Explanation.-- A housing finance institution creating and maintaining any special reserve in terms of clause (viii) of sub-section (1) of section 36 of the Income-tax Act, 1961 (43 of 1961), may take into account any sum transferred by it for the year to such special reserve for the purposes of this sub-section.
(2) No appropriation of any sum from the reserve fund including any sum in the special reserve which has been taken into account for the purposes of reserve fund in terms of sub-section (1), shall be made by such housing finance institution except for the purpose as may be 2[specified by the Reserve Bank] from time to time and every such appropriation shall be 3[reported to the National Housing Bank and the Reserve Bank] within twenty-one days from the date of such withdrawal:
4[Provided that the National Housing Bank or the reserve Bank] may, in any particular case and for sufficient cause being shown, extend the period of twenty-one days by such further period as it thinks fit or condone any delay in making such report.
(3) Notwithstanding anything contained in sub-section (1), the Central Government may, on the recommendation of 5[the Reserve Bank] and having regard to the adequacy of the paid-up capital and reserves of a housing finance institution which is a company in relation to its deposit liabilities, declare by order in writing that the provisions of sub-section (1) shall not be applicable to such housing finance institution for such period as may be specified in the order:
Provided that no such order shall be made unless the amount in the reserve fund under sub-section (1), together with the amount in the share premium account, is not less than the paid-up capital of the housing finance institution.]
1. Ins. by Act 15 of 2000, s. 13 (w.e.f. 12-6-2000).
2. Subs. by Act 23 of 2019, s. 156, for "specified by the National Housing Bank" (w.e.f. 09-08-2019).
3. Subs. by s. 156, ibid., for "reported to the National Housing Bank" (w.e.f. 09-08-2019).
4. Subs. by s. 156, ibid., for "Provided that the National Housing Bank" (w.e.f. 09-08-2019).
5. Subs. by s. 156, ibid., for "the National Housing Bank" (w.e.f. 09-08-2019).
2. Subs. by Act 23 of 2019, s. 156, for "specified by the National Housing Bank" (w.e.f. 09-08-2019).
3. Subs. by s. 156, ibid., for "reported to the National Housing Bank" (w.e.f. 09-08-2019).
4. Subs. by s. 156, ibid., for "Provided that the National Housing Bank" (w.e.f. 09-08-2019).
5. Subs. by s. 156, ibid., for "the National Housing Bank" (w.e.f. 09-08-2019).
Section 30 Reserve Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money
1[30. Reserve Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money-- The Reserve Bank may, if it considers necessary in the public interest so to do, by general or special order,--
(a) regulate or prohibit the issue by any housing finance institution which is a company of any prospectus or advertisement soliciting deposits of money from the public; and
(b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued.]
(a) regulate or prohibit the issue by any housing finance institution which is a company of any prospectus or advertisement soliciting deposits of money from the public; and
(b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued.]
1. Subs. by s. 157, ibid., for section 30 (w.e.f. 09-08-2019).
Section 30A Power of Reserve Bank to determine policy and issue directions.
1[30A. Power of Reserve Bank to determine policy and issue directions-- (1) If the Reserve Bank is satisfied that, in the public interest or to regulate the housing finance system of the country to its advantage or to prevent the affairs of any housing finance institution which is a company being conducted in a manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of such housing finance institutions, it is necessary or expedient so to do, it may determine the policy and give directions to all or any of the housing finance institution which is a company relating to income recognition, accounting standards, making of proper provision for bad and doubtful debts, capital adequacy based on risk weights for assets and credit conversion factors for off balance-sheet items and also relating to deployment of funds by a housing finance institution which is a company or a group of such housing finance institutions or housing finance institutions which are companies generally, as the case may be, and such housing finance institutions shall be bound to follow the policy so determined and the direction so issued.
(2) Without prejudice to the generality of the powers vested under sub-section (1), the Reserve Bank may give directions to housing finance institutions which are companies generally or to a group of such housing finance institutions or to any housing finance institution which is a company in particular as to--
(a) the purpose for which advances or other fund-based or non-fundbased accommodation may not be made; and
(b) the maximum amount of advances or other financial accommodation or investment in shares and other securities which, having regard to the paid-up capital, reserves and deposits of the housing finance institution and other relevant considerations, may be made by that housing finance institution to any person or a company or to a group of companies.
(3) The Reserve Bank may, if it considers necessary in the public interest so to do, issue directions to housing finance institutions which are companies accepting deposits referred to in section 31, either generally or to any group of such housing finance institutions accepting deposits, and in particular, in respect of any matters relating to, or connected with, the receipt of deposits, including credit rating of the housing finance institution which is a company accepting deposits, the rates of interest payable on such deposits, and the periods for which deposits may be received.
(4) If any housing finance institution which is a company accepting deposits fails to comply with any direction issued under sub-section (3), the Reserve Bank may, by order, prohibit the acceptance of deposits by that housing finance institution.]
(2) Without prejudice to the generality of the powers vested under sub-section (1), the Reserve Bank may give directions to housing finance institutions which are companies generally or to a group of such housing finance institutions or to any housing finance institution which is a company in particular as to--
(a) the purpose for which advances or other fund-based or non-fundbased accommodation may not be made; and
(b) the maximum amount of advances or other financial accommodation or investment in shares and other securities which, having regard to the paid-up capital, reserves and deposits of the housing finance institution and other relevant considerations, may be made by that housing finance institution to any person or a company or to a group of companies.
(3) The Reserve Bank may, if it considers necessary in the public interest so to do, issue directions to housing finance institutions which are companies accepting deposits referred to in section 31, either generally or to any group of such housing finance institutions accepting deposits, and in particular, in respect of any matters relating to, or connected with, the receipt of deposits, including credit rating of the housing finance institution which is a company accepting deposits, the rates of interest payable on such deposits, and the periods for which deposits may be received.
(4) If any housing finance institution which is a company accepting deposits fails to comply with any direction issued under sub-section (3), the Reserve Bank may, by order, prohibit the acceptance of deposits by that housing finance institution.]
1. Subs. by s. 158, ibid., for section 30A (w.e.f. 09-08-2019).
Section 31 Power of National Housing Bank to collect information from housing finance institutions as to deposits.
1[31. Power of National Housing Bank to collect information from housing finance institutions as to deposits.-- (1) The National Housing Bank may at any time direct that every housing finance institution which is a company accepting deposits shall furnish to the National Housing Bank and the Reserve Bank in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by such housing finance institution, as may be specified by the National Housing Bank by general or special order.
(2) Without prejudice to the generality of the power vested in the National Housing Bank under sub-section (1), the statements, information or particulars to be furnished under sub-section (1), may relate to all or any of the following matters, namely, the amount of the deposits, the purposes and periods for which, and the rates of interest and other terms and conditions on which, such deposits are received.
(3) Every housing finance institution which is a company receiving deposits, shall, if so required by the National Housing Bank and within such time as the National Housing Bank may specify, cause to be sent at the cost of such housing finance institution, a copy of its annual balance-sheet and profit and loss account or other annual accounts to every person from whom the housing finance institution which is a company holds, as on the last day of the year to which the accounts relate, deposits higher than such sum as may be specified by the National Housing Bank.]
(2) Without prejudice to the generality of the power vested in the National Housing Bank under sub-section (1), the statements, information or particulars to be furnished under sub-section (1), may relate to all or any of the following matters, namely, the amount of the deposits, the purposes and periods for which, and the rates of interest and other terms and conditions on which, such deposits are received.
(3) Every housing finance institution which is a company receiving deposits, shall, if so required by the National Housing Bank and within such time as the National Housing Bank may specify, cause to be sent at the cost of such housing finance institution, a copy of its annual balance-sheet and profit and loss account or other annual accounts to every person from whom the housing finance institution which is a company holds, as on the last day of the year to which the accounts relate, deposits higher than such sum as may be specified by the National Housing Bank.]
1. Subs. by Act 23 of 2019, s. 159, for section 31 (w.e.f. 09-08-2019).
Section 32 Duty of housing finance institutions to furnish statements, etc., under this Chapter
1[32. Duty of housing finance institutions to furnish statements, etc., under this Chapter.-- Every housing finance institution which is a company shall furnish the statements, information or particulars called for by the National Housing Bank or the Reserve Bank, as the case may be, and shall comply with any direction given to it under the provisions of this Chapter.]
1. Subs. by s. 160, ibid., for section 32 (w.e.f. 09-08-2019).