Rs 26,000cr Housing Mortgages Likely

The amendments to the National Housing Bank Act could throw open a Rs 26,000 crore housing mortgage securities market. This could result in a massive liquidity in the domestic housing sector, said NHB chairman P P Vora.

He said the amendments would also provide wide-ranging powers to the housing regulator, on the lines of the Reserve Bank's jurisprudence over non-banking finance companies.

"As far as a secondary market is concerned, it is estimated that the domestic housing mortgage market is worth Rs 26,000 crore. We are now on par with other countries as far as securitisation is concerned," Vora told Business Standard over the telephone.

 

He said NHB would make its maiden securitisation issue of Rs 110 crore in June "to test the waters". It plans to purchase mortgages of Rs 60 crore and Rs 50 crore from Housing Development Finance Corporation and LIC Housing Finance respectively. SBI Caps is the merchant banker to the issue.

Vora pointed out, "No company can now do housing finance business without a minimum net owned fund of Rs 25 lakh and registration with NHB. This would check the mushrooming of housing finance firms.

"The amendments would also protect depositors with housing finance firms. They can now nominate their heirs who can get back the deposits in the event of death," he said.

"Also, in case of a default by an HFC, NHB can appoint an authority, which can suo motu order the company to repay the depositors. If the HFC fails to honour the order, the authority can move the court with a criminal complaint, which may result in a minimum imprisonment of three years or a Rs 50 fine per day.

The NHB can also apply to the high court for winding up," Vora pointed out.