Government notifies taking over of NHB from RBI

The government has issued a notification taking over the National Housing Bank (NHB) after buying entire stake for Rs 1,450 crore from the Reserve Bank of India (RBI).

The RBI has exited the NHB, thus making it a fully government-owned entity. The central bank was holding 100 percent stake in the NHB, the housing finance regulator.

The move is part of ending the cross-holding in regulatory institutions and follows the recommendation of Narasimham-II committee report of October 2001 and the RBI's own discussion paper on the same, titled 'Harmonising the Role and Operations of Development Financial Institutions and Banks'.

"The central government hereby notifies that the subscribed capital of Rs 1,450 crore of the NHB by the RBI, stands transferred to, and vested in the central government upon payment of the face value of the subscribed capital, to the RBI, with effect from the 19th day of March, 2019," said the finance ministry notification dated April 29.

The Narasimham panel had said the RBI could not own those entities which are regulated by it.

The RBI has also divested its shareholding in Nabard. The central bank held 72.5 percent equity in Nabard worth Rs 1,450 crore, of which 71.5 percent amounting to Rs 1,430 crore were divested way back in October 2010 and the residual shareholding was divested on February 26, 2019.

Earlier, based on the second Narasimham committee recommendations, the RBI had proposed to transfer its ownership in State Bank of India, NHB and Nabard to the government in October 2001.

The decision to establish NHB was announced in the Budget 1987-88. Following that, the National Housing Bank Bill, providing a legislative framework for the NHB, was passed by Parliament in the winter session of 1987 and it became an Act on December 23, 1987.

The National Housing Policy of 1988 envisaged setting up of the NHB as the apex institution to promote the housing sector.