Options for licensing, regulation, supervision and closure of housing finance companies in India

Since its inception, the NHB has concentrated on promoting new housing finance companies (HFC"s) and establishing a facility for refinancing mortgage loans. Its regulatory function has been aimed principally at safeguarding the interest of depositors in HFC"s. To date, about 20 companies are classified as fully functioning HFC"s. While NHB"s mandate is broad and its supervision and regulatory practices are adequate for such a limited number of companies, the author of this report believes that, with expansion of the housing finance industry, NHB"s oversight and supervision will need to sharpened in several areas. This report presents options for consideration that could strengthen NHB"s oversight of the investment portfolio of companies, strengthen remedial actions when companies are engaged in unsound practices, and provide incentives for companies which have safe underwriting procedures. (Author abstract)