A Housing Finance Company is a company registered under the Companies Act, 2013 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.
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 ten crore rupees or such other higher amount, as the National Housing Bank may, by notification, specify.
Pre requirements for registration with NHB?
A company registered under the Companies Act, 2013 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 fulfilment 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.
Procedure for Registration