7 months after CEO quit, corner office at National Housing Bank still empty

The National Housing Bank (NHB) continues to remain headless almost seven months after Sriram Kalyanaraman stepped down as its managing director and chief executive officer (MD & CEO) even as the housing finance sector is passing through a less-than-pleasant homestay.

A subsidiary of the Reserve Bank of India (RBI) as on date, the NHB is the nodal agency for the supervision, refinancing and development of the housing finance segment.

Dakshita Das, additional secretary in the finance ministry, currently holds additional charge as MD & CEO of the NHB effective August 16 last year. 

A senior official at the housing finance regulator pointed out “while inspection and supervisory work goes on without a hiccup, at the policy level, the impact is being felt”. Kalyanaraman resigned on August 14, 2018.

The NHB has two executive director (ED) posts. One is held by Ashwani Kumar Tripathi, a former adviser in the RBI’s Monetary Policy Department. The other ED post has been lying vacant since R S Garg retired in 2017.

“If the RBI official on deputation were to go back, the situation could turn grimmer,” said a source. More so, given the troubles faced by the housing finance companies (HFCs) on liquidity and challenges to their business models. There is also the Centre’s expansive mandate on affordable housing — the ‘Housing for All 2022’ scheme under the Pradhan Mantri Awas Yojana, which has an ambitious target to provide every family a roof by the anniversary of 75 years of Independence. The government advertised for the post of ED-NHB last week.

What is also of import is the plan to transfer the RBI’ stake in the NHB to the Centre, akin to the banking regulator’s stake-shift in the National Bank for Agriculture and Rural Development. As on date the entire equity share capital of the NHB of Rs 1,450 crore is fully subscribed to by the central bank. The other organisational changes given effect to in the Union Budget of financial year 2017-18 (FY18) were the doing away of the provision of nomination of two directors by the RBI to the Board of the NHB and certain provisions in the NHB Act of 1987, which required consultation with the RBI.

On the regulatory front, the NHB on Tuesday said it proposed to raise HFC’s capital adequacy ratio to 13 per cent by FY20 from the present 12 per cent after the blowout at IL&FS which saw many firms go easy on loans on liquidity concerns. The draft was also for a ceiling on borrowings. It observed HFCs are exposed to risks arising out of counterparty failures, funding risks and risks pertaining to liquidity and solvency as any other financial sector player. Thus, there is a need for a review of the regulatory framework of HFCs.  “It is, therefore, all the more prudent to have clarity on the role and capacity building of the NHB by having a full-time MD & CEO,” said an official.

During FY18, refinance extended by the NHB amounted to Rs 24,921 crore. Unit-wise, about 90 per cent of the funds were for individual housing loans of up to Rs 2,500,000. Outstanding refinance stood at Rs 58,725 crore at end-June, 2018, and of this HFCs’ share was 65 per cent at Rs 38,146 crore.