SUBJECT: NOTE ON HOUSING FINANCE COMPANY
A) AN OVERVIEW:
A Housing Finance Company is a company registered under the Companies Act, 1956 which is primarily transacts or has as one of its principal objects, the transacting of the business of providing finance for housing, whether directly or indirectly and it is regulated by National Housing Bank.
The Housing Finance Company is form of non-banking financial company which is engaged in the principal business of financing of acquisition or construction of houses that includes the development of plots and lands for the construction of new houses and buildings.
Housing Finance companies are categorized in terms of the type of liabilities, by NHB, into Deposit and Non-Deposit accepting HFCs and are issued Certificate of Registration accordingly.
B) HFCs DIFFERENT FORM BANKS:
HFCs lend and make investments and hence their activities are a kind to that of banks. However, there are a few differences as given below:
- HFCs cannot accept demand deposits;
- HFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
- Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of HFCs, unlike in case of banks.
C) CRITERIA FOR HOUSING FINANCE COMPANY:
- Obtaining a certificate of registration from National Housing Bank issued under Chapter V of the said Act.
- Having the net owned fund of 10 crore rupees or such other higher amount.
- Entity should be Company or LLP registered with Ministry of Corporate Affairs
- Name of the company must contain the word “Housing Finance”
- Promoters & Directors should have a Banking Business Background or Knowledge of Housing Finance Business.
D) MINIMUM NET OWNED FUNDS FOR HFCs:
- Minimum net owned funds: 10 Crore.
E) PERIODICAL RETURNS AND STATEMENTS REQUIRED TO BE SUBMITTED BY THE HFCs TO NHB:
- Annual Return
- Half-yearly Return on Prudential Norms
- Quarterly Return on maintenance of Liquid Assets
- Auditor’s Certificate on annual basis certifying the capability of the HFC to repay deposits
- Copy of financial statements / Annual Report
- Returns on changes pertaining to address of the registered office of the HFC, its Directors.
- Filing a copy of the advertisement soliciting Public Deposits or statement in lieu thereof.
F) DOCUMENTS REQUIRED FOR HOUSING FINANCE COMPANY REGISTRATION:
- Certified Copy of MOA (Memorandum of Association) & AOA (Article of Association);
- Demand Draft of Rs. 10,000/- in favor of NHB, New Delhi.
- Board Resolution specifying the objective of the Company and authorization to file Application before NHB.
- Certificate by professional regarding the meeting the criteria of minimum NOF (Net Owned Fund) of Rs. 10 crores.
- Business Plan of the company for the next 3 years.
- Company profile.
- Business profile of MD/Directors/CEO etc.
- Audited Financials for the last three years, if available.
- Education and experience certificate of directors and employees.
- Certificate by professional regarding the source of the capital of the company.
- Details of the company in which promoters/ directors, associated.
G) CONDITIONS PERTAINING TO THE GRANT OF HOUSING FINANCE COMPANY LICENSE BY NHB:
Once a registration application is submitted, NHB (National Housing Board) will review the application and grant a Certificate of Registration after proper background verification and fulfillment of following conditions as per sub-section (4) of Section 29A of NHB act, 1987.
- HFC is or shall be in a position to pay its present or future depositors in full as and when their claims accrue.
- The Business Affairs of the Housing Finance Company are not being or are not likely to be conducted in a manner adverse to the interest of its present or future depositors.
- The operations and policy of the company should not be against the public interest or against the interest of the depositors.
- HFC has sufficient capital structure and better earnings prospects.
- Public interest shall be served, once the certificate of registration is granted to the HFC to commence or carry on the business in India.
- 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 an HFC shall not be prejudicial to the public interest or in the interests of the depositors.
G) SERVICES TO BE RENDERED BY US:
- Formation of Company or restructuring of existing Company
- Apply for HFC Registration with national Housing Bank (NHB).
- Liasoning with National Housing Bank departments and other applicable department
- Ensuring compliance of all applicable provisions, rules & regulations of the Act.
- To do all related activities till obtaining Certificate of HFC.
PLACE OF RENDERING SERVICES.
The place of rendering services generally shall be our office situated at 2nd Floor, 496/B, Om Apartment, Near KCC Classes, KasbaPeth, Pune – 411 011, Maharashtra, India.
Pramodkumar R. Ladda
Company Secretary & Insolvency Professional
Tel: +91-20-24570055 | Office Cell : +91- 9284293227, 9309845448, 8080051671 |
Personal Mob. : +91- 7972422151, 9595271145 |
Skype id: pramodladda