Own House is
the first and last dream of every one. Government of India, with a vision of “Housing
for all by 2022” launched Pradhan Mantri Awas Yojna (urban) –Housing for all”
on 25th June, 2015. In short there are huge need for housing in next
decade and Housing Loan facilities will play a remarkable role for Owing Home
and Housing Finance Business have a huge potentials in coming time. Following information
will throw some lights on requirements and procedure of incorporating Housing
Finance Company.
What is a
Housing Finance Company (HFC)?
A Housing
Finance Company is a company registered under the Companies Act, 1956 (1 of
1956) which primarily transacts or has as one of its principal objects, the
transacting of the business of providing finance for housing, whether directly
or indirectly.
2 Whether
an HFC requires registration from NHB apart from Registrar of Companies?
Yes. An HFC
also requires registration with NHB for commencing or carrying on the business
of housing finance.
3 Is
it necessary that every HFC should be registered with NHB?
In terms of
Section 29A of the National Housing Bank Act, 1987, no Housing Finance Company
shall commence or carry on the business of a housing finance institution
without -
(i) Obtaining
a certificate of registration from National Housing Bank issued under
Chapter V of the said Act, and
(ii) Having
the net owned fund of twenty five lakhs* rupees or such other higher amount, as
the National Housing Bank may, by notification, specify.
*NHB, in
exercise of its powers have from time to time specified the net owned fund
requirements and w.e.f. April 1, 2014, the said requirement is Rs. 10 crore.
4 Whether
an HFC can conduct business without obtaining certificate of registration from
NHB?
No. In terms
of section 29A of the National Housing Bank, 1987, HFCs cannot conduct business
of housing finance without obtaining a Certificate of Registration (CoR) from
NHB. Conduct of business without obtaining certificate of registration is an
offence punishable under the provisions of the National Housing Bank Act,
1987. NHB can also file application for winding up of such HFCs, under section
33B of the said Act.
5 What
are the requirements for commencing housing finance business by an HFC under
the NHB Act?
For
commencing the housing finance business, an HFC is required to have the
following in addition to the requirements under the Companies Act, 1956:
(i) Certificate
of registration from NHB
(ii) Minimum
net owned fund of Rs. 1000 lakhs ( w.e.f. 01.04.2014)
6 What
are the requirements for registration with NHB?
A company
registered under the Companies Act, 1956 and desirous of commencing business of
a housing finance institution, should comply with the following-
(i) either
it should primarily transacts or has as one of its principal objects of
transacting the business of providing finance for housing, whether directly or
indirectly; and
(ii) it
should have a minimum net owned fund of Rs. 10 crore.
NHB, after
its satisfaction on the fulfillment of following conditions provided under
sub-section (4) of Section 29A of the National Housing Bank Act, 1987 by a
company, may grant a Certificate of Registration.
(i) HFC
is or shall be in a position to pay its present or future depositors in full as
and when their claims accrue;
(ii) Affairs
of the HFC are not being or are not likely to be conducted in a manner
detrimental to the interest of its present or future depositors;
(iii) General
character of the management or the proposed management of the HFC shall not be
prejudicial to the public interest or to the interests of its depositors;
(iv) HFC
has adequate capital structure and earning prospects;
(v) Public
interest shall be served by the grant of certificate of registration to the HFC
to commence or carry on the business in India;
(vi) Grant
of certificate of registration shall not be prejudicial to the operation and
growth of the housing finance sector of the country; and
(vii) Any
other condition, fulfillment of which in the opinion of the NHB, shall be
necessary to ensure that the commencement of or carrying on the business in
India by a HFC shall not be prejudicial to the public interest or in the
interests of the depositors.
7 What
is meant by Net Owned Fund (NOF)?
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 –
(i) investments
of such institution in shares of-
· its
subsidiaries;
· companies
in the same group;
· all
other housing finance institutions which are companies; and
(ii) the
book value of debentures, bonds, outstanding loans and advances (including
hire-purchase and lease finance) made to, and deposits with,-
· subsidiaries
of such company; and
· Companies
in the same group, to the extent such amount exceeds ten per cent. of (a)
above;
“subsidiaries”
and “companies in the same group” shall have the same meanings assigned to them
in the Companies Act, 1956.
8 What
is the procedure for application to the NHB for Registration?
The applicant
company is required to submit a physical copy of the application (in duplicate)
along with the essentials documents to the Head Office of the National Housing
Bank. Further, Company is also required to attach a Demand Draft for Rs. 10,000
favoring National Housing Bank payable at New Delhi. Application should be made
in the prescribed form only.
9 What
are the essential documents required to be submitted along with the application
form to NHB?
A filled-in physical
copy of the application form (in duplicate) along with necessary enclosures to
be submitted to the Head Office of NHB. An indicative checklist of the
documents required to be submitted is also provided under the heading
“Instructions for filling up the Application” in the same page.
10 What
are the different categories of HFCs registered with NHB?
HFCs are
categorized in terms of the type of liabilities, by NHB, into Deposit and
Non-Deposit accepting HFCs and are issued Certificate of Registration
accordingly.
11 Whether
an appeal lies against the order of rejection of certificate of registration
and if so with whom?
Yes. Such HFC
can appeal to the Central Government within a period of 30 days from the date
on which such order of rejection is communicated to it.
14 Whether
NHB can cancel the Certificate of Registration granted to a HFC, and if so
under what circumstances?
In terms of
sub-section (5) of Section 29 A of the National Housing Bank Act, 1987, NHB may
cancel a certificate of registration granted to a housing finance company,
subject to certain provisions, if such company
(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) of Section 29A of the National Housing Bank Act, 1987;
or
(iv) fails-
(a) to
comply with any direction issued by the National Housing Bank under the
provisions of Chapter V of the National Housing Bank Act, 1987; or
(b) to
maintain accounts in accordance with the requirement of any law or any
direction or order issued by the National Housing Bank under the provisions of
Chapter V of the National Housing Bank Act, 1987; 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 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 V of the National Housing Bank Act,
1987 and such order has been in force for a period of not less than three
months.
15 What
are the appeal procedures available to a company, aggrieved by the order of
cancellation of certificate of registration or rejection of application for
registration?
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