The National Housing Bank Act, 1987

What the Act governs

The National Housing Bank Act, 1987 establishes the National Housing Bank as a corporate body that can acquire, hold and dispose of property, enter into contracts, and sue or be sued. Its purpose is to promote housing finance institutions at local and regional levels and provide them with financial and other support.

The National Housing Bank Act, 1987 extends throughout India. Most provisions commenced on 9 July 1988, while Chapter V and subsection (3) of section 49 commenced on 1 June 1989.

Who may be affected

The National Housing Bank Act, 1987 mainly affects the National Housing Bank, the Reserve Bank of India, housing finance institutions, their auditors, borrowers and depositors. It defines a housing finance institution as an institution, incorporated or otherwise, that primarily carries on housing finance business or has that business as one of its principal objects.

A property buyer or owner may encounter the framework when dealing with housing finance, property offered as loan security, deposit taking by a housing finance institution, or recovery proceedings involving secured property.

Key provisions

• The National Housing Bank is managed by a Board of Directors, which must act on business principles while considering the public interest.
• The Central Government may give written policy directions involving the public interest.
• The National Housing Bank may borrow, accept deposits, provide accommodation, impose conditions, inspect records and collect or publish credit information.
• The Act addresses charges over property offered as security, transfer and acquisition of rights, early repayment demands and inspection powers.
• Housing finance institutions are subject to provisions on registration, net owned funds, asset maintenance, reserve funds, deposits, statements, audits and inspections.
• The Reserve Bank of India may determine policy, issue directions, regulate or prohibit advertisements seeking deposits, prohibit deposit acceptance and restrict alienation of assets.
• Recovery officers may handle recovery applications and enforce recovery orders. Chief Metropolitan Magistrates and District Magistrates may assist recovery officers in taking charge of property.
• An Appellate Tribunal hears appeals within the recovery framework, and the Act includes provisions concerning appeal deposits, limitation and jurisdiction.
• The Act also covers accounts, audit, annual reporting, confidentiality, penalties, company offences, rule-making and regulations.

Relevance to property transactions

The National Housing Bank Act, 1987 does not itself describe a land title registration or planning approval process. Its property relevance arises mainly where property secures housing finance or becomes subject to recovery action by a housing finance institution.