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THE NATIONAL HOUSING BANK (AMENDMENT) ACT, 2000
No. 15 OF 2000
[24th May, 2000.]
An Act further to amend the National Housing Bank Act, 1987.
BE it enacted by Parliament in the Fifty-first Year of the Republic of India as follows:—
Short title and commencement.
1. (1) This Act may be called the National Housing Bank (Amendment) Act, 2000. Short title and commence-
(2) It shall come into force on such date as the Central Government may, by ment.
notification in the Official Gazette, appoint.
Amendment of section 2.
2. In section 2 of the National Housing Bank Act, 1987 (hereinafter referred to as the principal Act), in clause (d), for the words "its principal object", the words "one of its principal objects" shall be substituted.
Substitution of new section for section 4.
3. For section 4 of the principal Act, the following section shall be substituted, namely:—
Capital.
"4. (7) The authorised and paid-up capital of the National Housing Bank shall be three hundred and fifty crores of rupees:
Provided that the Central Government may, in consultation with the Reserve Bank, by notification, increase the authorised capital up to two thousand crores of rupees.
(2) The Board may, on such terms and conditions, as determined by it from time to time, issue the increased authorised capital to the Reserve Bank, the Central Government, scheduled banks, public financial institutions, housing finance institutions or such other institutions, as may be approved by the Central Government:
Provided that no increase in the issued capital shall be made in such manner that the Reserve Bank, the Central Government, public sector banks, public financial institutions or other institutions owned or controlled by the Central Government, hold in aggregate at any time, less than fifty-one per cent, of the issued capital of the National Housing Bank.".
Amendment of section S.
4. In section 5 of the principal Act, in sub-section (3), for clauses (a) and (b), the following clauses shall be substituted, namely:—
"(a) the Chairman, if he is a whole-time director or if he is holding offices both as the Chairman and the Managing Director, or
(b) the Managing Director, if the Chairman is not a whole-time director, or if the Chairman being a whole-time director, is absent,".
Amendment of section 6.
5. In section 6 of the principal Act,—
(a) in sub-section (I),—
(i) in clause (b), for the words "three directors", the words "two directors" shall be substituted;
(ii) for clause (c), the following clauses shall be substituted, namely:—
"(c) two directors, who shall be persons with experience in the working of institutions involved in providing funds for housing or engaged in housing development or have experience in the working of financial institutions or scheduled banks;
(ca) two directors elected in such manner as may be prescribed by shareholders other than the Reserve Bank, the Central Government and other institutions owned or controlled by the Central Government;";
(b) in sub-section (2), for the words, brackets and letter "excluding the directors referred to in clause (d)", the words, brackets and letters "excluding the directors referred to in clauses (ca) and (d)" shall be substituted.
Amendment of section 7.
6. In section 7 of the principal Act, in sub-section (2), for the words, brackets and letters "clauses (b) and (c) ", the words, brackets and letters "clauses (b), (c) and (ca)" shall be substituted.
Amendment of section 14.
7. In section 14 of the principal Act,—
(i) for clause (b), the following clauses shall be substituted, namely:—
"(b) making of loans and advances or rendering any other form of financial assistance whatsoever for housing activities to housing finance institutions, scheduled banks, state co-operative agricultural and rural development banks or any other institution or class of institutions as may be notified by the Central Government;
(ba) making of loans and advances for housing or residential township-cum-housing development or slum clearance projects;";
(ii) after clause (e), the following clauses shall be inserted, namely:—
"(ea) buying, selling or otherwise dealing in any loans or advances secured by mortgage or charge of the immovable property relating to scheduled banks or housing finance institutions;
(eb) creating one or more trusts and transferring loans or advances together with or without securities therefor to such trusts for consideration;
(ec) setting aside loans or advances held by the National Housing Bank and issuing and selling securities based upon such loans or advances so set aside in the form of debt obligations, trust certificates of beneficial interest or other instruments, by whatever name called, and to act as trustee for the holders of such securities;
(ed) setting up of one or more mutual funds for undertaking housing finance activities;
(ee) undertaking or participating in housing mortgage insurance;";
(iii) for clause (f), the following clause shall be substituted, namely:—
"(f) promoting, forming, conducting or associating in the promotion, formation or conduct of companies, mortgage banks, subsidiaries, societies, trusts or such other association of persons as it may deem fit for carrying out all or any of its functions under this Act;".
Amendment of section 5.
8. In section 15 of the principal Act, in sub-section (1),— Amendment of section 5.
(a) in clause (b), for the words "the Central Government", the words "the Central Government, scheduled bank's, financial institutions, mutual funds" shall be substituted;
(b) in clause (c), for the words "a period which shall not be less than twelve months from the date of the making of the deposit", the words "such period and" shall be substituted;
(c) in clause (d), for sub-clause (i), the following sub-clause shall be substituted, namely:—
"(i) by way of loans and advances and generally obtain financial assistance in such manner or on such terms and conditions as may be specified by the Reserve Bank;".
Insertion of new sections 16A and 16B
9. After section 16 of the principal Act, the following sections shall be inserted, insertion of namely:—
Assistance to borrower when operate or a charge in the property offered as security.
"16A. (1) Where any person or institution seeks any financial assistance from Assistance to the National Housing Bank on the security of any immovable property belonging to borrower when him or to that institution or on the security of the property of some other person to operate or a charge in the whose property is offered as a collateral security for such assistance, such person or property institution or, as the case may be, such other person may execute a written declaration offered as in the form set out in the Third Schedule to this Act stating therein the particulars of the immovable property which is proposed to be offered as security, or as the case may be, collateral security, for such assistance and agreeing that the dues relating to the assistance, if granted, shall be a charge on such immovable property and, if on receipt of such declaration, the National Housing Bank grants any financial assistance to the person or institution aforesaid, the dues relating to such assistance shall, without prejudice to the rights of any other creditor holding any prior charge or mortgage in respect of the immovable property so specified, be, by virtue of the provisions of this section, a charge on the property specified in the declaration aforesaid.
(2) Where any further immovable property is offered by a person or an institution as security for the financial assistance referred to in sub-section (1), such person or institution may execute a fresh declaration, as far as may be in the form set out in the Third Schedule to this Act, whereupon the dues relating to such assistance shall, by virtue of the provisions of this section, also be a charge on the property specified in such fresh declaration.
(3) A declaration made under sub-section (I) or sub-section (2) may be varied or revoked at any time by the person or institution as aforesaid, with the prior approval of the National Housing Bank.
(4) Every declaration made under sub-section (1) or sub-section (2) shall be deemed to be a document registrable as an agreement under the provisions of the Registration Act, 1908 and no such declaration shall have effect unless it is so registered.
Amount and security to be held in trust.
16B. (1) Any sums received by a borrowing institution in repayment or realisation of loans and advances financed or refinanced either wholly or partly by the National Housing Bank shall, to the extent of the accommodation granted by the National Housing Bank and remaining outstanding, be deemed to have been received by the borrowing institution in trust for the National Housing Bank, and shall accordingly be paid by such institution to the National Housing Bank.
(2) Where any accommodation has been granted by the National Housing Bank to a borrowing institution, all securities held, or which may be held, by such borrowing institution on account of any transaction in respect of which such accommodation has been granted, shall be held by such institution in trust for the National Housing Bank.".
Amendment of section 18.
10. In section 18 of the principal Act, for the words "housing finance institution", the word "institution" shall be substituted.
Insertion of new sections 18Aand 18B.
11. After section 18 of the principal Act, the following sections shall be inserted, namely:—
Exemption from registration
"18A. Notwithstanding anything contained in sub-section (1) of section 17 of the Registration Act, 1908,—
(a) any instrument in the form of debt obligations or trust certificate of beneficial interest or other instruments, by whatever name called, issued by the National Housing Bank to securities the loans granted by the housing finance institutions and scheduled banks, and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to an undivided interest afforded by a registered instrument, whereby the National Housing Bank has acquired the rights and interests in relation to such loans and in securities therefor; or
(b) any transfer of such instruments referred to in clause (a), shall not require compulsory registration.
Recovery of dues as arrears of land revenue
18B. Where any amount is due under an agreement to the National Housing Bank, whether acting as a trustee or otherwise, in respect of securitisation of loans of housing finance institutions and scheduled banks, the National Housing Bank may without prejudice to any other mode of recovery make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied that any amount is due, it may issue a certificate for the amount to the Collector and the Collector shall proceed to recover that amount in the same manner as arrears of land revenue.".
Amendment of sections 19 to 25.
12. In sections 19 to 25 of the principal Act, for the words "housing finance institutions", wherever they occur, the word "institutions" shall be substituted.
Insertion of new sections 29A to 29C.
13. After section 29 of the principal Act, the following sections shall be inserted, namely:—
Requirement of registration and net owned fund.
"29A. (1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no housing finance institution which is a company shall commence or carry on the business of a housing finance institution without—
(a) obtaining a certificate of registration issued under this Chapter; and
(b) having the net owned fund of twenty-five lakh rupees or such other higher amount, as the National Housing Bank may, by notification, specify.
(2) Every such housing finance institution shall make an application for registration to the National Housing Bank in such form as may be specified by the National Housing Bank:
Provided that a housing finance institution which is a company in existence on the commencement of the National Housing Bank (Amendment) Act, 2000, shall make an application for registration to the National Housing Bank before the expiry of six months from such commencement and notwithstanding anything contained in sub-section (1), may continue to carry on the business of housing finance institution until a certificate of registration is issued to it or rejection of application for registration is communicated to it.
(3) Notwithstanding anything contained in sub-section (1), a housing finance institution which is a company in existence on the commencement of the National Housing Bank (Amendment) Act, 2000, and having a net owned fund of less than twenty-five lakh rupees, may, for the purpose of enabling such institution to fulfil the requirement of the net owned fund, continue to carry on the business of a housing finance institution—
(i) for a period of three years from such commencement; or
(ii) for such further period as the National Housing Bank may, after recording the reasons in writing for so doing, extend,
subject to the conditions that such institution shall, within three months of fulfilling the requirement of the net owned fund, inform the National Housing Bank about such fulfilment:
Provided that the period allowed to continue business under this sub-section shall in no case exceed six years in the aggregate.
(4) The National Housing Bank, for the purpose of considering the application for registration, may require to be satisfied by an inspection of the books of such housing finance institution or otherwise that the following conditions are fulfilled:—
(a) that housing finance institution is or shall be in a position to pay its present or future depositors in full as and when their claims accrue;
(b) that the affairs of the housing finance institution are not being or are not likely to be conducted in a manner detrimental to the interest of its present or future depositors;
(c) that the general character of the management or the proposed management of the housing finance institution shall not be prejudicial to the public interest or the interests of its depositors;
(d) that the housing finance institution has adequate capital structure and earning prospects;
(e) that the public interest shall be served by the grant of certificate of registration to the housing finance institution to commence or to carry on the business in India;
(f) that the grant of certificate of registration shall not be prejudicial to the operation and growth of the housing finance sector of the country; and
(g) any other condition, fulfilment of which in the opinion of the National Housing Bank, shall be necessary to ensure that the commencement of or carrying on the business in India by a housing finance institution shall not be prejudicial to the public interest or in the interests of the depositors.
(5) The National Housing Bank may, after being satisfied that the conditions specified in sub-section (4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose.
(6) The National Housing Bank may cancel a certificate of registration granted to a housing finance institution under this section if such institution—
(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
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