Housing Finance Companies

All about registration of Housing Finance Company with NHB

Housing Finance Company

Housing finance company is a type of finance company or an institution that provides housing-related advice. It is important to register a housing finance company with the National Housing Bank to become eligible for availing of a wide range of government schemes. This article outlines the detailed procedure for the Registration of Housing Finance Company with NHB (National Housing Bank).

What is a Housing Finance Company?

A HFC or a housing finance company can be defined as a specialised financial institution that primarily focuses on providing home-related or housing facilities at affordable finance to individual members and families for purchase. HFC provides several types of finance facilities, such as providing housing loans at a reasonable rate of interest, construction, and renovation of homes. It is not a generalised financial institution, but it is a type of specialised financial institution that primarily focuses on providing financial assistance that is specifically focused on housing-related activities.

The type of housing-related financial activities includes but not restricted to home loans, mortgage loans, loans against property, construction finance etc. These financial activities can range from the requirement of a loan for purchasing a home to providing financing for the construction or for renovation of a home etc.

In India, housing finance companies or HFCs, have been there for several decades. HHCs in India are regulated and governed under the provisions mentioned in the NHB (National Housing Bank). It regulates the safe and smooth working of the HFCs. Some of the largest and most well-known HFCs in India include HDFC, LIC Housing Finance, DHFL, Indiabulls Housing Finance etc.

Eligibility for Registering

The eligibility criteria for registering Housing Finance Company with NHB in India are as follows:-

  • For registering as a housing finance company, the company must be incorporated as a public limited company under the provisions mentioned in the Companies Act, 2013[1]. The company must have a minimum paid-up capital of minimum INR 20 crores.
  • The HFC company must have a satisfactory track record in the financial sector and must have a clean background, i.e. not involved in any sort of fraudulent activities. The HFC that wants to register itself must have a minimum of three directors, and out of three of the, two of them must be Indians. The director must be an individual and not any corporate entity.
  • The HFC must be formed with the intention of providing housing-related finance to individuals. In order to become eligible for the registration, NHC must have net-owned funds of not less than 25 crores.
  • Apart from all these, the NHC must have a sound and reliable business plan that should be able to demonstrate its capacity and ability to meet the needs of its customers effectively and in a successful manner.
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Documents Required for the Registration

Following documents are required for the registration of the Housing Finance Company with NHB (National Housing Bank). These documents are given below:-

  • MoA, PAN (Permanent Account Number), TAN (Tax Account Number) and proof of identity and address of directors and shareholders. Apart from these documents, NHC’s article of association, details of the registered office and board resolution for the incorporation of the company are also required.
  • Details regarding the principal business of the company, authorised capital, issued capital and paid-up capital details of the company are also required.
  • Financial statements such as audited financial statements of the promoter companies, bank solvency certificate and bank statements from the past 6 months are also required. Along with these documents, other mandatory documents that are required for the registration of the HFCs are the project report, details regarding the proposed business model, financial projections and other personal details regarding the core management members of the team are also required.
  • No-objection certificate from the already existing HFC and approval from the RBI for the purpose of incorporation of the HFC are also required. However, it is crucial to keep in mind that the list of documents required for registration can vary depending on the current laws and discretion of the Reserve Bank of India.

Procedure of Registering a Housing Finance Company with NHB

The HFCs or housing finance company in India is usually registered by the National Housing Bank. For registration, it is first necessary to incorporate the HFC. The process of registering HFCs in India involves several steps, including choosing the company’s name, registering Housing Finance Company with NHB, obtaining necessary licenses and registrations and lastly, obtaining the certificate of registration. The procedure of registering a housing finance company with NHB in India requires several steps. These steps are given below:-

  • For registration of Housing Finance Company with NHB, first, the application of incorporation must be submitted to the registrar of companies, i.e. (ROC). The ROC will then submit the certificate of incorporation after the verification of the submitted documents and after the payment of the required fees.
  • For conducting business related to housing-related financial activities, HFCs are required to obtain a license from the National Housing Bank. For registration of Housing Finance Companies with the National Housing Bank, a minimum net-owned fund of INR 200 million is required. This amount must be met before the license can be issued.
  • The National Housing Bank requires a fee to be paid for the license issue. This fee must be paid for the issue of the license. After the payment of fees and submission and verification of all the necessary documents, NHB will issue the license for registration. The license will be valid for 5 years from the date of license issue.
  • For the successful conduction of housing-related business, it is important for Housing Finance Companies to register with the Reserve Bank of India. The RBI may require some additional documents for registration.
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It is recommended to seek expert advice from someone who holds expertise in the specified law before proceeding with the registration.

Conclusion

In a nutshell, it can be said that the registration of a Housing Finance Company with NHB provides a great number of advantages or benefits ranging from stability to serving their customers in the best possible manner.

Also Read: Housing Finance Company Registration: Step By Step Registration Process

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