THE NATIONAL HOUSING BANK ACT, 1987 
___________ 

ARRANGEMENT OF SECTIONS 
___________ 

CHAPTER I 

PRELIMINARY 

SECTIONS 

1.  Short title, extent and commencement. 
2.  Definitions. 

ESTABLISHMENT OF THE NATIONAL HOUSING BANK AND CAPITAL THEREOF 

CHAPTER II 

3.  Establishment and incorporation of National Housing Bank. 
4.  Capital. 

CHAPTER III 

MANAGEMENT OF THE NATIONAL HOUSING BANK 

5.  Management. 
6.  Board of Directors. 
7.  Term  of  office  of  Chairman,  Managing  Director  and  other  directors,  service  conditions,             

etc.  

8.  Disqualifications.  
9.  Vacation and resignation of office by directors. 
10.  Casual vacancy in the office of Chairman or Managing Director. 
11.  Meetings of Board. 
12.  Executive Committeeand other committees. 
13.  Director of Board or member of committee thereof not to participate in meetings in certain cases. 

CHAPTER IV 

BUSINESS OF THE NATIONAL HOUSING BANK 

14.  Business of the National Housing Bank. 
15.  Borrowings and acceptance of deposits by National Housing Bank. 
16.   Loans in foreign currency. 
16A. Assistance to borrower when to operate or a charge in the property offered as security. 
16B. Amount and security to be held in trust. 
17. Power to transfer rights. 
18. Power to acquire rights. 
18A. Exemption from registration. 
19. Power to impose conditions for accommodation. 
20. Power to call for repayment before agreed period. 
21. National Housing Bank to have access to records. 
22.Validity of loan or advance not to be questioned. 
23. National Housing Bank not to make loans or advances against its own bonds or debentures. 
24. Power to inspect. 

1 

 
 
SECTIONS 

25. Power to collect credit information. 
26. Power to publish information. 
27. Advisory services. 

CHAPTER V 

PROVISIONS RELATING TO HOUSING FINANCE INSTITUTIONS  

28. Definition of deposit. 
29. Chapter not to apply in certain cases. 
29A. Requirement of registration and net owned fund. 
29B. Maintenance of percentage of assets. 
29C. Reserve fund. 
30. Reserve  Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of 

money. 

30A. Power of Reserve Bank to determine policy and issue directions. 
31.  Power  of  National  Housing  Bank  to  collect  information  from  housing  finance  institutions  as  to 

deposits. 

32. Duty of housing finance institutions to furnish statements, etc., under this Chapter. 
33. Powers and duties of auditors. 
33A. Power of Reserve Bank to prohibit acceptance of deposit and alienation of assets. 
33B. Power of National Housing Bank to file winding up petition. 
34. Inspection. 
35. Deposits not to be solicited by unauthorised persons. 
35A. Disclosure of information. 
35B. Power of Reserve Bank to exempt housing finance institution. 
36. Chapter V to override other laws. 
36A. Power to order repayment of deposit. 
36B. Nomination by depositors. 

OTHERPROVISIONSRELATINGTO HOUSING FINANCE INSTITUTIONS 

CHAPTER VA 

36C. Definitions. 
36D. Appointment of recovery officer. 
36E. Application to the recovery officer. 
36F. Procedure in respect of application under section 36E. 
36G. Enforcement of order of recovery officer. 
36H. Chief Metropolitan Magistrate and District Magistrate to assist recovery officer in taking charge 

of property. 

36-I. Establishment of Appellate Tribunal. 
36J. Composition of Appellate Tribunal. 
36K. Qualification for appointment as Presiding Officer of Appellate Tribunal. 
36L. Term of office. 
36M. Staff of Appellate Tribunal. 
36N. Salaries and allowances and other terms and conditions of service of Presiding Officers. 
36-O. Filling up of vacancies.  

2 

 
 
 
 
SECTIONS 

36P. Resignation and removal. 
36Q. Orders constituting Appellate Tribunal to be final and not to invalidate its  proceedings. 
36R. Jurisdiction, powers and authority of Appellate Tribunal. 
36S. Appeal to the Appellate Tribunal. 
36T. Deposit of amount due, on filing appeal. 
36U. Procedure and powers of recovery officer and Appellate Tribunal. 
36V. Limitation 
36W. Presiding Officer, recovery officer, other officers and employees to be public servant. 
36X. Protection of action taken in good faith. 
36Y. Bar of jurisdiction. 
36Z. Transitional provisions. 

CHAPTER VI 

FUNDS, ACCOUNTS AND AUDIT 

37. General Fund and other funds. 
38. Preparation of balance sheet, etc., of National Housing Bank. 
39. Disposal of surplus. 
40. Audit. 
41. Returns. 
42. Annual report on housing. 

CHAPTER VII 

MISCELLANEOUS 

43. Staff of National Housing Bank. 
43A. Delegation of powers. 
44. Obligation as to fidelity and secrecy. 
45. Defects in appointment not to invalidate acts, etc. 
45A. Arrangement with National Housing Bank on appointment of directors to prevail. 
46. Protection of action taken under the Act.  
47. Indemnity of directors. 
47A. Nomination in respect of deposits, bonds, etc. 
48. [Omitted.] 
49. Penalties. 
50. Offences by companies. 
51. Cognizance of offences. 
52. Application of fine. 
52A. Power of National Housing Bank and Reserve Bank to impose fine. 
53. Bankers’ Books Evidence Act 18 of 1891, to apply in relation to the National HousingBank. 
54. Liquidation of National Housing Bank. 
54A. Power to make rules. 
55. Power of the Board to make regulations. 
56. [Repealed.] 
57. Power to remove difficulties. 
THE FIRST SCHEDULE. 
[REPEALED.] 
THE THIRD SCHEDULE. 

3 

 
 
THE NATIONAL HOUSING BANK ACT, 1987 

ACT NO. 53 OF 1987 

An Act to establish a bank to be known as the National Housing Bank to operate as a principal 
agency  to  promote  housing  finance  institutions  both  at  local  and  regional  levels  and  to 
provide financial and other support to such institutions and for matters connected therewith 
or incidental thereto. 

BE it enacted by Parliament in the Thirty-eighth Year of the Republic of India as follows:— 

[23rd December, 1987.]  

CHAPTER I 

PRELIMINARY 

1. Short title, extent and commencement.—(1) This Act may be called the National Housing Bank 

Act, 1987. 

(2) It extends to the whole of India. 
(3)  It  shall  come  into  force  on  such  date1  as  the  Central  Government  may,  by  notification  in  the 
Official  Gazette, appoint, and  different  dates  may  be  appointed  for  different  provisions of this  Act and 
any reference in any provision to the commencement of this Act shall be construed as a reference to the 
coming into force of that provision. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “Board” means the Board of Directors of the National Housing Bank referred to in section 6; 

(b) “Chairman” means the Chairman of the Board appointed under section 6;  

(c) “director” means a director appointed under section 6;  

(d)  “housing  finance  institution”  includes  every  institution,  whether  incorporated  or  not,  which 
primarily transacts or has as 2[one of its principal objects], the transacting of the business of providing 
finance for housing, whether directly or indirectly;  

(e) “Managing Director” means the Managing Director appointed under section 6;  

(f) “National Housing Bank” means the National Housing Bank established under section 3;  

(g) “notification” means a notification published in the Official Gazette;  

(h) “prescribed” means prescribed by regulations made under this Act; 

(i) “Reserve Bank” means the Reserve Bank of India constituted under section 3 of the Reserve 

Bank of India Act, 1934 (2 of 1934). 

(j) words and expressions used herein and not defined but defined in the Reserve Bank of India 

Act, 1934 (2 of 1934), shall have the meanings respectively assigned to them in that Act;  

(k) words and expressions used herein and not defined either in this Act or in the Reserve Bank of 
India Act, 1934 (2 of 1934), but defined in the Banking Regulation Act, 1949 (10 of 1949), shall have 
the meanings respectively assigned to them in the Banking Regulation Act, 1949. 

1. 9th July, 1988, vide notification No. S.O. 684(E), dated 9th July, 1988, see Gazette of India, Extraordinary, Part II, sec. 3(ii) 

[in except Chapter V and sub-section (3) of section 49]. 

1st June, 1989, vide notification No. S.O. 394(E), dated 1st June, 1989, see Gazette of India, Extraordinary, Part II, sec. 3(ii)           
[in respect of Chapter V and sub-section (3) of section 49]. 

2. Subs. by Act 15 of 2000, s. 2, for “its principal object” (w.e.f. 12-6-2000). 

4 

 
 
 
                                                           
CHAPTER II 

ESTABLISHMENT OF THE NATIONAL HOUSING BANK AND CAPITAL THEREOF 

3. Establishment and incorporation of National Housing Bank.—(1) With effect from such date 
as  the  Central  Government  may,  by  notification,  appoint, there  shall  be  established  for  the  purposes  of 
this Act, a bank to be known as the National Housing Bank. 

(2) The National Housing Bank shall be a body corporate with the name aforesaid having  perpetual 
succession  and  a  common  seal  with  power,  subject  to  the  provisions  of  this  Act,  to  acquire,  hold  and 
dispose of property and to contract, and may, by that name, sue and be sued. 

 (3) The head office of the National Housing Bank shall be at  1[New Delhi or at such other place as 

the Central Government] may, by notification, specify. 

(4) The National Housing Bank may establish offices, branches or agencies at any place in India, and 

with the previous approval of 2[the Central Government], at any place outside India. 

3[4.  Capital.—(1)  The  authorised  and  paid-up  capital  of  the  National  Housing  Bank  shall  be  three 

hundred and fifty crores of rupees: 

4[Provided that the Central Government may, by notification, increase the authorised capital up to two 

thousand crore rupees or such other amount as may be determined by it from time to time.] 

(2) The Board may, on such terms and conditions, as determined by it from time to time, issue the 
increased  authorised  capital  to  5***,  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  5***, 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.] 

6[(3)  The  subscribed  capital  of  one  thousand  four  hundred  and  fifty  crore  rupees  of  the  National 
Housing Bank, which has been subscribed to by the Reserve Bank, shall stand transferred to, and vested 
in the Central Government upon payment of the face value of the subscribed capital, to the Reserve Bank 
from such date as may be notified by the Central Government.] 

CHAPTER III 

MANAGEMENT OF THE NATIONAL HOUSING BANK 

5.  Management.—(1)  The  general  superintendence,  direction  and  management  of  the  affairs  and 
business  of  the  National  Housing  Bank  shall  vest  in  the  Board  of  Directors,  which  shall  exercise  all 
powers and do all acts and things, which may be exercised or done by the National Housing Bank.  

(2) Subject to the provisions of this Act, the Board, in discharging its functions, shall act on business 

principles with due regard to public interest. 

(3)  Subject  to  the  provisions  of  sub-section  (1)  and  save  as  otherwise  provided  in  the  regulations 

made under this Act,— 

1. Subs. by Act 13 of 2018, s. 163, for “Bombay or at such other place as the Reserve Bank” (w.e.f. 1-6-2018). 
2. Subs. by s. 163, ibid., for “the Reserve Bank” (w.e.f. 1-6-2018). 
3. Subs. by Act 15 of 2000, s. 3, for section 4 (w.e.f. 12-6-2000). 
4. Subs. by Act 13 of 2018, s. 164, for the proviso (w.e.f. 1-6-2018).  
5. The words “the Reserve Bank,” omitted by s. 164, ibid. (w.e.f. 1-6-2018). 
6. Ins. by s. 164, ibid. (w.e.f. 1-6-2018). 

5 

 
                                                           
1[(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 if he is whole-time director, or if the Chairman 

being a whole-time director, is absent,] 

shall also have powers of general superintendence, direction and management of the affairs and business 
of the National Housing Bank and may also exercise all powers and do all acts and things which may be 
exercised or done by the National Housing Bank and shall act on business principles with due regard to 
public interest.  

(4) The Managing Director shall, in the discharge of his powers and functions, follow such directions 

as the Chairman may give.  

(5)  In  the  discharge  of  its  functions  under  this  Act,  the  National  Housing  Bank  shall  be  guided  by 
such directions in matters of policy involving public interest as the Central Government 2*** may give in 
writing. 

6. Board of Directors.—(1) The Board of Directors of the National Housing Bank shall consist of 

the following, namely:— 

(a) a Chairman and a Managing Director: 

Provided that the same person may be appointed as Chairman and as Managing Director;  

(b)  3[two  directors] from  amongst  the experts  in  the field  of  housing,  architecture,  engineering, 
sociology, finance, law, management and corporate planning or in any other field, special knowledge 
of which is considered useful to the National Housing Bank;  

4[(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  5*** 

the Central Government and other institutions owned or controlled by the Central Government;] 

(d) 6[one director] from out of the directors of the Reserve Bank;  

(e) three directors from amongst the officials of the Central Government; 

(f) two directors from amongst the officials of the State Government. 

(2) The Chairman, the Managing Director and other directors  7[excluding the directors referred to in 
clauses (ca) and (d)], shall be appointed by the Central Government  8[the director] referred to in clause 
(d) shall be nominated by the Reserve Bank. 

7.  Term  of  office  of  Chairman,  Managing  Director  and  other  directors,  service  conditions, 
etc.—(1) The  Chairman  and  the  Managing  Director shall  hold  office  for  such term,  not  exceeding  five 
years  and  shall  receive  such  salary  and  allowances  and  be  governed  by  such  terms  and  conditions  of 
service as the Central Government may 9*** specify and shall be eligible for re-appointment: 

Provided that the Chairman or, as the case may be, the Managing Director shall, notwithstanding the 

expiration of his term, continue to hold office until his successor enters upon his office. 

1. Subs. by Act 15 of 2000, s. 4, for clauses (a) and (b) (w.e.f. 12-6-2000). 
2.  The  words  “,  in  consultation with  the  Reserve  Bank,  or  the  Reserve  Bank,”  omitted  by  Act  13  of  2018,  s.  165  (w.e.f.  1-6-

2018). 

3. Subs. by Act 15 of 2000, s. 5, for “three directors” (w.e.f 12-6-2000). 
4. Subs. by s. 5, ibid., for clause (c) (w.e.f. 12-6-2000). 
5. The words “the Reserve Bank,” omitted by Act 13 of 2018, s. 166 (w.e.f. 1-6-2018). 
6. Subs. by s. 166, ibid., for “two directors” (w.e.f. 1-6-2018). 
7. Subs. by Act 15 of 2000, s. 5, for “excluding the directors referred to in clause (d)” (w.e.f. 12-6-2000). 
8. Subs. by Act 13 of 2018, s. 166, for “in consultation with the Reserve Bank and directors” (w.e.f. 1-6-2018). 
9. The words “, in consultation with the Reserve Bank,” omitted by s. 167, ibid. (w.e.f. 1-6-2018). 

6 

 
                                                           
(2) The directors referred to in  1[clauses (b), (c) and (ca)] of sub-section (1) of section 6 shall hold 

office for a term of three years: 

* 

2* 
(3) The Central Government may 3*** remove the Chairman or the Managing Director, or any other 
director referred to in sub-section (2), at any time before the expiry of his term of office after giving him a 
reasonable opportunity of showing case against the proposed removal. 

* 

* 

* 

(4) Notwithstanding anything contained in sub-sections (1) and (3), the Central Government 3***shall 
have  the  right  to  terminate  the  term  of  office  of  the  Chairman  or,  as  the  case  may  be,  the  Managing 
Director, at any time before the expiry of the term specified under sub-section (1), by giving him notice of 
not  less  than  three  months  in  writing  or  three  months’  salary  and  allowances  in  lieu  thereof  and  the 
Chairman or the Managing Director, as the case may be, shall also have the right to relinquish his office 
at  any  time  before  the  expiry  of  the  term  specified  under  sub-section  (1),  by  giving  to  the  Central 
Government notice of not less than three months in writing or three months’ salary and allowances in lieu 
thereof. 

(5)  The  directors  shall  be  paid  such  fees  and  allowances  as  may  be  prescribed  for  attending  the 
meetings  of the  Board  or of  any  of  its committees  and  for  attending  to  any  other  work  of the  National 
Housing Bank: 

Provided that no such fee shall be payable to any director, who is an official of the Government or a 

director of the Reserve Bank. 

8. Disqualifications.—No person shall be a director of the Board, if he— 

(a) is, or becomes of unsound mind and has been so declared by a competent court; or 

(b)  is  or  has  been  convicted  of  any  offence  which,  in  the  opinion  of  the  Central  Government, 

involves moral turpitude; or 

(c) is, or at any time has been, adjudicated as insolvent or has suspended payment of his debts or 

has compounded with his creditors; or  

(d) has, for any reason, been removed or dismissed from the service of— 

(i) the Government, or  

(ii) the Reserve Bank, the State Bank or any other bank, or  

(iii) any public financial institution, or state financial corporation, or 

(iv) any other corporation owned or controlled by the Government.  

9. Vacation and resignation of office by directors.—(1) If a director— 

(a) becomes subject to any of the disqualifications mentioned in section 8; or 

(b) is absent without leave of the Board for three or more consecutive meetings thereof,  

his seat shall thereupon become vacant. 

(2)  Any  director  may  resign  his  office  by  giving  notice  thereof  in  writing  to  the  authority  that 
appointed or, as the case may be, nominated him and on his resignation being accepted by such authority 
or if his resignation is not sooner accepted, on the expiry of three months from the receipt thereof by such 
appointing authority, he shall be deemed to have vacated his office. 

10. Casual vacancy in the office of Chairman or Managing Director.—If the Chairman, or as the 
case may be, the Managing Director, is by infirmity or otherwise rendered incapable of carrying out his 
duties or is absent on leave or otherwise, in circumstances not involving the vacation of his appointment, 
the Central Government may, appoint another person to act in his place during his absence. 

1. Subs. by Act 15 of 2000, s. 6, for “clauses (b) and (c)” (w.e.f. 12-6-2000). 
2. The proviso omitted by Act 45 of 2006, s. 19 (w.e.f. 16-10-2006). 
3. The words “, in consultation with the Reserve Bank,” omitted by Act 13 of 2018, s. 167(w.e.f. 1-6-2018). 

7 

 
 
 
 
 
 
 
 
 
                                                           
11. Meetings of Board.—(1) The Board shall meet at such times and places and shall observe such 

rules of procedure in regard to the transaction of business at its meetings, as may be prescribed. 

(2) The Chairman, or, if for any reason he is unable to attend a meeting of the Board, the Managing 
Director,  or,  in  the  event  of  both  the  Chairman  and  the  Managing  Director  being  unable  to  attend  a 
meeting,  any  other  director  nominated  by  the  Chairman  in  this  behalf  and  in  the  absence  of  such 
nomination,  any  director  elected  by  the  directors  present  from  among  themselves  at  the  meeting,  shall 
preside at the meeting. 

(3) All questions which come up before any meeting of the Board shall be decided by a majority of 
votes of the directors present and voting, and in the event of an equality of votes, the Chairman, or, in his 
absence, the person presiding, shall have a second or casting vote. 

12.  Executive  Committee  and  other  committees.—(1)  The  Board  may  constitute  an  Executive 

Committee consisting of such number of directors as may be prescribed. 

(2)  The  Executive  Committee  shall  discharge  such  functions  as  may  be  prescribed,  or,  as  may  be 

delegated to it, by the Board. 

(3)  The  Board  may  constitute  such  other  committees,  whether  consisting  wholly  of  directors  or 
wholly of other persons or partly of directors and partly of other persons as it thinks fit for such purposes, 
as it may decide and any committee so constituted shall discharge such functions as may be delegated to it 
by the Board. 

(4)  The  Executive  Committee  or  any  other  committees  constituted  under  this  section  shall  meet  at 
such times and places and shall observe such rules of procedure in regard to transaction of business at its 
meetings, as may be prescribed. 

13. Director of Board or member of committee thereof not to participate in meetings in certain 
cases.—Any  director  of  the  Board  or  any  member  of  a  committee,  who  has  any  direct  or  indirect 
pecuniary interest in any matter coming up for consideration at a meeting of the Board or a committee 
thereof, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the 
nature of his interest at such meeting and the disclosure shall be recorded in the minutes of the Board, or 
the committee, as the case may be, and the director or member shall not take any part in any deliberation 
or decision of the Board or the committee with respect to that matter.  

CHAPTER IV 

BUSINESS OF THE NATIONAL HOUSING BANK 

14.  Business  of  the  National  Housing  Bank.—Subject  to  the  provisions  of  this  Act,  the  National 

Housing Bank may transact all or any of the following kinds of business, namely:— 

(a) promoting, establishing, supporting or aiding in the promotion, establishment and support of 

housing finance institutions; 

1[(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;] 

(c)  subscribing  to  or  purchasing  stocks,  shares,  bonds,  debentures  and  securities  of  every  other 

description; 

(d)  guaranteeing  the  financial  obligations  of  housing  finance  institutions  and  underwriting  the 
issue of stocks, shares, bonds, debentures and securities of every other description of housing finance 
institutions;  

1. Subs. by Act 15 of 2000, s. 7, for clause (b) (w.e.f. 12-6-2000). 

8 

 
                                                           
(e)  drawing,  accepting,  discounting  or  rediscounting,  buying  or  selling  and  dealing  in  bills  of 
exchange, promissory notes, bonds, debentures, hundies, coupons and other instruments by whatever 
name called; 

1[(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;] 

2[(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;] 

(g) undertaking research and surveys on construction techniques and other studies relating to or 

connected with shelter, housing and human settlement; 

(h) formulating one or more schemes, for the purpose of mobilisation of resources and extension 

of credit for housing; 

3[(hh)  formulating  a  scheme  for  the  purpose  of  accepting  deposits  referred  to  in  clause  (a)  of 
section  2  of  the  Voluntary  Deposits  (Immunities  and  Exemptions)  Act,  1991  (47  of  1991)  and 
crediting forty per cent. of the amount of such deposits to a special fund created under section 37;] 

(i) formulating one or more schemes; for the economically weaker sections of society which may 

be subsidised by the Central Government or any State Government or any other source; 

(j) organising training programmes, seminars and symposia on matters relating to housing; 

(k) providing guidelines to the housing finance institutions to ensure their growth on sound lines;  

(l) providing technical and administrative assistance to housing finance institutions; 

(m)  co-ordinating  with  the  Life  Insurance  Corporation  of  India  the  Unit  Trust  of  India,  the 
General Insurance Corporation of India and other financial institutions, in the discharge of its overall 
functions; 

(n)  exercising  all  powers  and  functions  in  the  performance  of  duties  entrusted  to  the  National 

Housing Bank under this Act or under any other law for the time being in force; 

(o) acting as agent of the Central Government, the State Government or the Reserve Bank or of 

any authority as may be authorised by the Reserve Bank; 

(p) any other kind of business which the Central Government may, on the recommendation of the 

Reserve Bank, authorise; 

(q) generally, doing of all such matters and things as may be incidental to or consequential upon 

the exercise of its powers or the discharge of its duties under this Act. 

15.  Borrowings  and  acceptance  of  deposits  by  National  Housing  Bank.—(1)  The  National 

Housing Bank may, for the purpose of carrying out its functions under this Act— 

1. Ins. by Act 15 of 2000, s. 7(w.e.f 12-6-2000). 
2. Subs. by Act 15 of 2000, s. 7, for clause (f) (w.e.f. 12-6-2000). 
3. Ins. by Act 47 of 1991, s. 5 (w.e.f. 20-9-1991). 

9 

 
 
                                                           
(a)  issue  and  sell  bonds  and  debentures  with  or  without  the  guarantee  of  1[the  Central 
Government,  scheduled  banks,  financial  institutions,  mutual  funds],  in  such  manner  and  on  such 
terms as may be prescribed; 

(b) borrow money from the Central Government and from any other authority or organisation or 

institution approved by that Government on such terms and conditions as may be agreed upon; 

(c)  accept  deposits  repayable  after  the  expiry  of  2[such  period  and]  on  such  terms  as  may 

generally or specially be approved by the Reserve Bank: 

3[Provided that nothing contained in this clause shall apply to deposits accepted under the scheme 

formulated by the Bank in pursuance of clause (hh) of section 14;] 

(d) borrow money from the Reserve Bank— 

4[(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;] 

(ii)  out  of  the  National  Housing  Credit  (Long  Term  Operations)  Fund  established  under 
section  46D  of  the  Reserve  Bank  of  India  Act,  1934  (2  of  1934)  or  any  of  the  purposes 
specified in that section; 

(e)  receive  for  services  rendered,  such  remuneration,  commission,  commitment  charges, 
consultancy  charges,  service  charges,  royalties,  premia,  licence  fees  and  any  other  consideration  of 
whatever description; 

(f) receive gifts, grants, donations or benefactions from Government or any other source. 

(2)  The  Central  Government  may,  on  a  request  being  made  to  it  by  the  National  Housing  Bank, 
guarantee the bonds and debentures issued by the National Housing Bank as to the repayment of principal 
and the payment of interest at such rate as may be fixed by that Government. 

16. Loans in foreign currency.—(1) Notwithstanding anything contained in 5[the Foreign Exchange 
Management Act, 1999 (42 of 1999)] or in any other law for the time being in force relating to foreign 
exchange, the National Housing Bank may, for the purpose of making loans and advances under this Act, 
borrow  in  such  manner  and  on  such  conditions  as  may  be  prescribed  in  consultation  with  the  Reserve 
Bank  and  with  the  previous  approval  of  the  Central  Government,  foreign  currency  from  any  bank  or 
financial institution in India or elsewhere. 

(2)  The  Central  Government  may,  where  necessary,  guarantee  any  loan  taken  by  the  National 
Housing Bank under sub-section (1) or any part thereof as to the repayment of principal and the payment 
of interest and other incidental charges. 

6[16A. Assistance to borrower when to operate or a charge in the property offered as security.—
(1) Where any person or institution seeks any financial assistance from the National Housing Bank on the 
security  of  any  immovable  property  belonging  to  him  or  to  that  institution  or  on  the  security  of  the 
property of some other person whose property is offered as a collateral security for such assistance, such 
person or institution or, as the case may be, such other person may execute a written declaration 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 

1. Subs. by Act 15 of 2000, s. 8, for “the Central Government” (w.e.f. 12-6-2000). 
2.  Subs.  by  s.  8,  ibid.,  for  “a  period  which  shall  not  be  less  than  twelve  months  from  the  date  of  the  making  of  the  deposit”          

(w.e.f. 12-6-2000). 

3. Added by Act 47 of 1991, s. 5 (w.e.f. 20-9-1991). 
4. Subs. by Act 15 of 2000, s. 8, for sub-clause (i) (w.e.f. 12-6-2000). 
5. Subs. by Act 13 of 2018, s. 168, for “the Foreign Exchange Regulation Act, 1973 (46 of 1973). 
6. Ins. by Act 15 of 2000, s. 9 (w.e.f. 12-6-2000). 

10 

 
                                                           
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 (1) 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 (16 of 1908) and no such 
declaration shall have effect unless it is so registered. 

16B. Amount and security to be held in trust.—(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.] 

17. Power to transfer rights.—The rights and interests of the National Housing Bank (including any 
other rights incidental thereto) in relation to any loan or advance made, or any amount recoverable, by it, 
may be transferred by the National Housing Bank, either in whole or in part, by the execution or issue of 
any instrument or by the transfer of any instrument by endorsement, or in any other manner in which the 
rights  and  interests  in  relation  to  such  loan  or  advance  may  be  lawfully  transferred,  and  the  National 
Housing Bank may, notwithstanding such transfer, act as the trustee within the meaning of section 3 of 
the Indian Trusts Act, 1882 (2 of 1882), for the transferee. 

18. Power to acquire rights.—The National Housing Bank shall have the right to acquire, by transfer 
or assignment, the rights and interests of any  1[institution] (including any other rights incidental thereto) 
in relation to any loan or advance made, or any amount recoverable by such institution, either in whole or 
in part, by the execution or issue of any instrument or by the transfer of any instrument or in any other 
manner in which the rights and interests in relation to such loan or advance may be lawfully transferred. 

2[18A.  Exemption  from  registration.—Notwithstanding  anything  contained  in  sub-section  (1)  of 

section 17 of the Registration Act, 1908 (16 of 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. 

1. Subs. by Act 15 of 2000, s. 10, for “housing finance institution” (w.e.f. 12-6-2000).  
2. Ins. by s. 11, ibid. (w.e.f. 12-6-2000) 

11 

 
                                                           
18B. Recovery of dues as arrears of land revenue.—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.] 

19. Power to impose conditions for accommodation.—In entering into any transaction under this 
Chapter with any borrowing  1[institution], the National Housing Bank may impose such conditions as it 
may think necessary or expedient for protecting the interests of the National Housing Bank. 

20. Power to call for repayment before agreed period.—Notwithstanding anything to the contrary 
contained  in  any  agreement,  the  National  Housing  Bank  may,  by  notice  in  writing,  require  any 
borrowing2[housing  finance  institution]  to  discharge  forthwith  in  full  its  liabilities  to  the  National 
Housing Bank— 

(a) if it appears to the Board that false or misleading information in any material particular was 

given in the application for the loan or advance; or 

(b)  if  the  borrowing  1[institution]  has  failed  to  comply  with  any  of  the  terms  of  the  agreement 

with the National Housing Bank in the matter of the loan or advance; or 

(c) if there is a reasonable apprehension that the borrowing 1[institution] is unable to pay its debts 

or that proceedings for liquidation may be commenced in respect thereof; or 

(d) if for any reason, it is necessary so to do to protect the interests of the National Housing Bank. 

21. National Housing Bank to have access to records.—(1) The National Housing Bank shall have 
free access to all such records of any  1[institution] which seeks to avail of any credit facilities from the 
National Housing Bank and to all such records of any person who seeks to avail of any credit facilities 
from such 1[institution], the perusal of which may appear to the national Housing Bank to be necessary in 
connection with the providing of finance or other assistance to such 1[institution] or the refinancing of any 
loan or advance made to such person by that 1[institution]. 

(2) The National Housing Bank may require any institution or person referred to in sub-section (1), to 
furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as 
the case may be, shall be bound to comply with such requisition. 

22. Validity of loan or advance not to be questioned.—Notwithstanding anything to the contrary 
contained in any other law for the time being in force, the validity of any loan or advance made by the 
National Housing Bank in pursuance of the provisions of this Act shall not be called in question merely 
on the ground of non-compliance with the requirements of such other law or of any resolution, contract, 
or any instrument regulating the constitution of the borrowing 1[institution]: 

Provided that nothing in this section shall enable any company or co-operative society to obtain any 
loan or advance where the instrument relating to the constitution of such company or co-operative society 
does not empower such company or co-operative society so to do. 

23.  National  Housing  Bank  not  to  make  loans  or  advances  against  its  own  bonds  or 
debentures.—The National Housing Bank shall not make any loan or advance on the security of its own 
bonds or debentures. 

24. Power to inspect.—(1) The National Housing Bank may at any time and shall, on being directed 
so  to  do  by  the  Reserve  Bank,  cause  an  inspection  to  be  made  by  one  or  more  of  its  officers  of  any 
1[institutions] to which the National Housing Bank has made any loan or advance or granted any other 
financial assistance, and its books, accounts and other documents; and the National Housing Bank shall 
supply to the 1[institution] a copy of its report on such inspection. 

1. Subs. by Act 15 of 2000,s. 12, for “housing finance institution” (w.e.f. 12-6-2000). 
2. Subs. by s. 12,ibid.,for “housing finance institution” (w.e.f. 12-6-2000). 

12 

 
                                                           
(2) It shall be the duty of every officer, employee or other person or persons incharge of the whole or 
part of the affairs of the  1[institution] to produce to any officer making an inspection under sub-section 
(1), all such books, accounts and other documents in his custody or power and to furnish within such time 
as the said officer may specify, any statements, information relating to the affairs of the  1[institution] as 
the said officer may require of him. 

25. Power to collect credit information.—(1) The National Housing Bank may, for the purpose of 
the efficient discharge of its functions under this Act, at any time direct any  1[institution] to submit to it 
credit information in such form and within such time as may be specified by the National Housing Bank 
from time to time. 

(2) Every  1[institution] shall, notwithstanding anything to the contrary contained in any law for the 
time being in force or in any instrument regulating the constitution thereof or in any agreement executed 
by it, relating to the secrecy of its dealings with its constituents, be bound to comply with any directions 
issued under sub-section (1). 

(3) The National Housing Bank may, for the purpose of the efficient discharge of its functions under 
this Act collect from the Central and State Governments, local authorities, the Reserve Bank, any bank or 
such financial or other institutions as the Reserve Bank may specify in this behalf, credit information or 
other information. 

Explanation.—For  the  purposes  of  this  section  and  section  26,  credit  information  means  any 

information relating to— 

(i) the amount of loans and advances and other credit facilities granted for the purpose of housing; 

(ii) the nature of security taken for such loans, advances or other credit facilities; 

(iii) the guarantees furnished; and 

(iv) any other information which has a bearing on the credit-worthiness of the borrower. 

26.  Power  to  publish  information.—The  National  Housing  Bank,  if  it  considers  it  in  the  public 
interest so to do, may publish any credit information or other information obtained by it under this Act, in 
such consolidated form or in any other form as it thinks fit. 

27.  Advisory  services.—The  National  Housing  Bank  may  provide  advisory  services  to  the  Central 

and State Governments, local authorities and other agencies connected with housing, in respect of— 

(a) formulation of overall policies aimed at promoting the growth of housing and housing finance 

institutions; 

(b) legislation relating to matters having a bearing on shelter, housing and human settlement.  

CHAPTER V 
1[PROVISIONS RELATING TO HOUSING FINANCE INSTITUTIONS] 

28. Definition of deposit.—In this Chapter the term ‘deposit’ shall have the meaning assigned to it in 

section 451 of the Reserve Bank of India Act, 1934 (2 of 1934). 

29.  Chapter  not to  apply  in  certain  cases.—(1) The  provisions of this  Chapter  shall not apply  to 
deposits  accepted  by  a  housing  finance  institution  which  is  a  firm  or  an  unincorporated  association  of 
individuals. 

(2) For the removal of doubts, it is hereby declared that the firms and unincorporated associations of 
individuals referred to in sub-section (1) shall continue to be governed by the provisions of Chapter IIIC 
of the Reserve Bank of India Act, 1934 (2 of 1934). 

2[29A.  Requirement  of  registration  and  net  owned  fund—3[(1)  Notwithstanding  anything 
contained in this Chapter or in any other law for the time being in force, no housing finance institution 

1. Subs. by Act 23 of 2019, s. 153, for the heading (w.e.f. 09-08-2019). 
2. Ins. by Act 15 of 2000, s. 13 (w.e.f. 12-6-2000). 
3. Subs. by Act 23 of 2019, s. 154, for sub-sections (1) and (2) (w.e.f. 09-08-2019). 

13 

 
                                                           
which is a company shall commence housing finance as its principal business or carry on the business of 
housing finance as its principal business without— 

(a) obtaining a certificate of registration issued under this Chapter; and 

(b) having the net owned fund of ten crore rupees or such other higher amount, as the Reserve 

Bank may, by notification, specify. 

(2) Every housing finance institution which is a company shall make an application for registration to 

the Reserve Bank in such form as may be specified by the Reserve Bank: 

Provided  that  an  application  made  by  a  housing  finance  institution  which  is  a  company  to  the 
National Housing Bank and pending for consideration with the National Housing Bank as on the date of 
commencement of the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019, shall stand 
transferred to the Reserve Bank and thereupon the application shall be deemed to have been made under 
the provisions of this sub-section and shall be dealt with accordingly: 

Provided  further  that  the  provisions  of  this  sub-section  shall  not  apply  to  the  housing  finance 
institution which is a company and having a valid registration certificate granted under sub-section (5) on 
the date of commencement of the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019, 
and  such  housing  finance  institution  shall  be  deemed  to  have  been  granted  a  certificate  of  registration 
under the provision of this Act.] 

* 

1* 
(4) The 2[Reserve 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  2[Reserve  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. 
3[Provided that the Reserve Bank may, wherever it considers necessary so to do, require the National 
Housing Bank to inspect the books of such housing finance institution and submit a report to the Reserve 
Bank for the purpose of considering the application.] 

(5) The 2[Reserve 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  2[Reserve  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 

1. Sub-section (3) omitted by Act 23 of 2019, s. 154 (w.e.f. 09-08-2019). 
2. Subs. by s. 154, ibid., for “National Housing Bank” (w.e.f. 09-08-2019). 
3. Ins. by s. 154, ibid. (w.e.f. 09-08-2019). 

14 

 
 
 
 
 
 
 
 
 
                                                           
(iii) at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section 

(4); or 

(iv) fails— 

(a) to comply with any direction issued by the 1[Reserve bank or the National Housing Bank] 

under the provisions of this Chapter; or 

(b) to maintain accounts in accordance with the requirement of any law or any direction or 
order  issued  by  the  4[Reserve  bank  or the  National Housing  Bank]  under the provisions  of this 
Chapter; or 

(c) to submit or offer for inspection its books of account and other relevant documents when 
so demanded by an inspecting authority of the 4[Reserve bank or the National Housing Bank]; or 
(v) has been prohibited from accepting deposit by an order made by the National Housing Bank 
under the  provisions  of  this  Chapter  and  such  order has  been  in force  for  a  period  of  not less than 
three months: 

Provided  that  before  cancelling  a  certificate  of  registration  on  the  ground  that  the  2[housing 
finance institution which is a company] has failed to comply with the provisions of clause (ii) or has 
failed to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (4), the 3[Reserve 
Bank],  unless  it is  of the  opinion  that  the  delay  in  cancelling  the  certificate  of  registration  shall  be 
prejudicial to public interest or the interest of the depositors or the 1[housing finance institution which 
is a company], shall give an opportunity to such institution on such terms as the 2[Reserve Bank] may 
specify for taking necessary steps to comply with such provision or fulfilment of such condition: 

Provided further that before making any order of cancellation of certificate of registration, such 

institution shall be given a reasonable opportunity of being heard. 

(7) A housing finance institution aggrieved by the order or rejection of application for registration 
or cancellation of certificate of registration may prefer an appeal, within a period of thirty days from 
the  date  on  which  such  order  of  rejection  or  cancellation  is  communicated  to  it,  to  the  Central 
Government and the decision of the Central Government where an appeal has been preferred to it, or 
of the 2[Reserve Bank] where no appeal has been preferred, shall be final: 

Provided  that  before  making  any  order  of  rejection  of  appeal,  such  institution  shall  be  given  a 

reasonable opportunity of being heard. 

Explanation.—For the purposes of this section,— 

(I) “net owned fund” means— 

(a)  the  aggregate  of  the  paid-up  equity  capital  and  free  reserves  as  disclosed  in  the  latest 

balance-sheet of the housing finance institution after deducting therefrom— 

(i) accumulated balance of loss; 

(ii) deferred revenue expenditure; and 

(iii) other intangible assets; and 

(b) further reduced by the amounts representing— 

(1) investments of such institution in shares of— 

(i) its subsidiaries; 

(ii) companies in the same group; 
4[(iii) all other housing finance companies; and] 

(2)  the  book  value  of  debentures,  bonds,  outstanding  loans  and  advances  (including  hire-

purchase and lease finance) made to, and deposits with,— 

(i) subsidiaries of such company; and 

1. Subs. by Act 23 of 2019, s. 154, for “National Housing Bank” (w.e.f. 09-08-2019). 
2. Subs. by s. 154, ibid.,for “housing finance institution” (w.e.f. 09-08-2019). 
3. Subs. by s. 154, ibid., for “National Housing Bank” (w.e.f. 09-08-2019). 
4. Subs. by s. 154,ibid., for sub-item (iii) (w.e.f. 09-08-2019). 

15 

 
                                                           
(ii) companies in the same group, to the extent such amount exceeds ten per cent. of (a) 

above; 

1[(II)  the  expressions  “subsidiaries”  and  “companies  in  the  same  group”  shall  have  the 

meanings respectively assigned to them in the Companies Act, 2013 (18 of 2013): 

Provided  that  the  National  Housing  Bank  shall,  in  consultation  with  the  Reserve  Bank, 

specify the companies to be deemed to be in the same group.] 

 29B.  Maintenance  of  percentage  of  assets.—(1)  Every  2[housing  finance  institution]  shall  invest 
and continue to invest in India in unencumbered approved securities, valued at a price not exceeding the 
current market price of such securities, an amount which, at the close of business on any day, shall not be 
less  than  five  per  cent.  or  such  higher  percentage  not  exceeding  twenty-five  per  cent.as  the  3[Reserve 
Bank]may,  from  time  to  time  and  by  notification,  specify,  of  the  deposits  outstanding  at  the  close  of 
business on the last working day of the second preceding quarter. 

(2) Every housing finance institution shall maintain in India in an account with a scheduled bank in 
term deposits or certificate of deposits (free of charge or lien) or in deposits with the National Housing 
Bank  or  by  way  of  subscription  to  the  bonds  issued  by  the  National  Housing  Bank,  or  partly  in  such 
account or in such deposit or partly by way of such subscription, a sum which, at the close of business on 
any day, together with the investment made under sub-section (1) shall not be less than ten per  cent. or 
4[such  higher  percentage  not  exceeding  twenty-five  per  cent.,  as  the  Reserve  Bank  may],  from  time  to 
time  and  by  notification  specify,  of  the  deposits  outstanding  in  the  books  of  the  housing  finance 
institution at the close of business on the last working day of the second preceding quarter. 

(3) For the purpose of ensuring compliance with the provisions of this section, the  1[Reserve Bank] 
may require every such housing finance institution to furnish a return to it in such form, in such a manner 
and for such period as may be specified by the 1[Reserve Bank]. 

(4) If the amount invested by a housing finance institution at the close of business on any day is less 
than the rate specified under sub-section (1) or sub-section (2), such housing finance institution shall be 
liable to pay to the National Housing Bank, in respect of such shortfall, a penal interest at a rate of three 
per  cent.  per  annum  above  the  bank  rate  on  such  amount  by  which  the  amount  actually  maintained  or 
invested  falls  short  of  the  specified  percentage,  and  where  the  shortfall  continues  in  the  subsequent 
quarters, the rate of penal interest shall be five per cent. per annum above the bank rate on such shortfall 
for each subsequent quarter. 

(5) (a) The penal interest payable under sub-section (4) shall be payable within a period of fourteen 
days from the date on which a notice issued by the National Housing Bank demanding payment of the 
same  is  served  on  the  housing  finance  institution  and,  in  the  event  of  a  failure  of  the  housing  finance 
institution to pay the same within such period, may be levied by a direction of the principal civil court 
having jurisdiction in the area where an office of the defaulting housing finance institution is situated and 
such direction shall be made only upon and application made in this behalf to the court by the National 
Housing Bank; and 

(b) When the court makes a direction under clause (a), it shall issue a certificate specifying the sum 
payable by the housing finance institution and every such certificate shall be enforceable in the manner as 
if it were a decree made by the court in a suit. 

(6) Notwithstanding anything contained in this section, if the National Housing Bank is satisfied that 
the defaulting housing finance institution had sufficient cause for its failure to comply with the provisions 
of sub-section (1) or sub-section (2), it may not demand the payment of the penal interest. 

Explanation.—For the purposes of this section,— 

1. Subs. by Act 23 of 2019, s. 154, for clause (II) (w.e.f. 09-08-2019). 
2. Subs. by s. 155, ibid., for “housing finance institution” (w.e.f. 09-08-2019). 
3. Subs. bys. 155,ibid., for “National Housing Bank” (w.e.f. 09-08-2019). 
4. Subs. by s. 155, ibid., for “such higher percentage not exceeding twenty-five per cent., as the National Housing Bank may” 

(w.e.f. 09-08-2019). 

16 

 
                                                           
(i) “approved securities” means securities of any State Government or of the Central Government 
and  such  bonds,  both  the  principal  whereof  and  the  interest  whereon  shall  have  been  fully  and 
unconditionally guaranteed by any such Government; 

(ii) “unencumbered approved securities” includes the approved securities lodged by the housing 
finance institution with another institution for an advance or any other arrangement to the extent to 
which such securities have not been drawn against or availed of or encumbered in any manner; 

(iii) “quarter” means the period of three months ending on the last day of March, June, September 

or December. 

29C.  Reserve  fund.—(1)  Every  housing  finance  institution  which  is  a  company  shall  create  a 
reserve fund and transfer therein a sum not less than twenty per  cent. of its net profit every year as 
disclosed in the profit and loss account and before any dividend is declared. 

Explanation.—A housing finance institution creating and maintaining any special reserve in terms of 
clause  (viii)  of  sub-section  (1)  of  section  36  of  the  Income-tax  Act,  1961  (43  of  1961),  may  take  into 
account any sum transferred by it for the year to such special reserve for the purposes of this sub-section. 

(2) No appropriation of any sum from the reserve fund including any sum in the special reserve which 
has been taken into account for the purposes of reserve fund in terms of sub-section (1), shall be made by 
such housing finance institution except for the purpose as may be  1[specified by the Reserve Bank] from 
time  to  time  and  every  such  appropriation  shall  be  2[reported  to  the  National  Housing  Bank  and  the 
Reserve Bank] within twenty-one days from the date of such withdrawal: 

3[Provided that the National Housing Bank or the reserve Bank] may, in any particular case and for 
sufficient cause being shown, extend the period of twenty-one days by such further period as it thinks fit 
or condone any delay in making such report. 

(3)  Notwithstanding  anything  contained  in  sub-section  (1),  the  Central  Government  may,  on  the 
recommendation  of  4[the  Reserve  Bank]  and  having  regard  to  the  adequacy  of  the  paid-up  capital  and 
reserves of a housing finance institution which is a company in relation to its deposit liabilities, declare by 
order  in  writing  that  the  provisions  of  sub-section  (1)  shall  not  be  applicable  to  such  housing  finance 
institution for such period as may be specified in the order: 

Provided that no such order shall be made unless the amount in the reserve fund under sub-section 
(1),  together  with  the  amount  in  the  share  premium  account,  is  not  less  than  the  paid-up  capital  of  the 
housing finance institution.] 

5[30.  Reserve  Bank  to  regulate  or  prohibit  issue  of  prospectus  or  advertisement  soliciting 
deposits of money—The Reserve Bank may, if it considers necessary in the public interest so to do, by 
general or special order,— 

(a) regulate or prohibit the issue by any housing finance institution which is a company  of any 

prospectus or advertisement soliciting deposits of money from the public; and 

(b)  specify  the  conditions  subject  to  which  any  such  prospectus  or  advertisement,  if  not 

prohibited, may be issued.] 
6[30A. Power of Reserve Bank to determine policy and issue directions—(1) If the Reserve Bank 
is  satisfied  that,  in  the  public  interest  or  to  regulate  the  housing  finance  system  of  the  country  to  its 
advantage or to prevent the affairs of any housing finance institution which is a company being conducted 
in a manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of such 
housing finance institutions, it is necessary or expedient so to do, it may determine the policy and give 
directions  to  all  or  any  of  the  housing  finance  institution  which  is  a  company  relating  to  income 
recognition,  accounting  standards,  making  of  proper  provision  for  bad  and  doubtful  debts,  capital 

1. Subs. by Act 23 of 2019, s. 156, for “specified by the National Housing Bank” (w.e.f. 09-08-2019). 
2. Subs. by s. 156, ibid., for “reported to the National Housing Bank” (w.e.f. 09-08-2019). 
3. Subs. by s. 156, ibid., for “Provided that the National Housing Bank” (w.e.f. 09-08-2019). 
4. Subs. by s. 156, ibid., for “the National Housing Bank” (w.e.f. 09-08-2019). 
5. Subs. by s. 157, ibid., for section 30 (w.e.f. 09-08-2019). 
6. Subs. by s. 158, ibid., for section 30A (w.e.f. 09-08-2019). 

17 

 
                                                           
adequacy based on risk weights for assets and credit conversion factors for off balance-sheet items and 
also relating to deployment of funds by a housing finance institution which is a company or a group of 
such  housing  finance  institutions  or  housing  finance  institutions  which  are  companies  generally,  as  the 
case may be, and such housing finance institutions shall be bound to follow the policy so determined and 
the direction so issued. 

(2) Without prejudice to the generality of the powers vested under sub-section (1),the Reserve Bank 
may give directions to housing finance institutions which are companies generally or to a group of such 
housing finance institutions or to any housing finance institution which is a company in particular as to— 

(a) the purpose for which advances or other fund-based or non-fund based accommodation may 

not be made; and 

(b) the maximum amount of advances or other financial accommodation or investment in shares 
and other securities which, having regard to the paid-up capital, reserves and deposits of the housing 
finance institution and other relevant considerations, may be made by that housing finance institution 
to any person or a company or to a group of companies. 

(3) The Reserve Bank may, if it considers necessary in the public interest so to do, issue directions to 
housing  finance  institutions  which  are  companies  accepting  deposits  referred  to  in  section  31,  either 
generally  or  to  any  group  of  such  housing  finance  institutions  accepting  deposits,  and  in  particular,  in 
respect of any matters relating to, or connected with, the receipt of deposits, including credit rating of the 
housing finance institution which is a company accepting deposits, the rates of interest payable on such 
deposits, and the periods for which deposits may be received. 

(4) If any housing finance institution which is a company accepting deposits fails to comply with any 
direction  issued  under  sub-section  (3),  the  Reserve  Bank  may,  by  order,  prohibit  the  acceptance  of 
deposits by that housing finance institution.] 

1[31. Power of National Housing Bank to collect information from housing finance institutions 
as  to  deposits.—(1)  The  National  Housing  Bank  may  at  any  time  direct  that  every  housing  finance 
institution  which  is  a  company  accepting  deposits  shall  furnish  to  the  National  Housing  Bank  and  the 
Reserve  Bank  in  such  form,  at  such  intervals  and  within  such  time,  such  statements,  information  or 
particulars relating to or connected with deposits received by such housing finance institution, as may be 
specified by the National Housing Bank by general or special order. 

(2)  Without  prejudice  to  the  generality  of  the  power  vested  in  the  National  Housing  Bank  under  
sub-section  (1),  the  statements,  information  or  particulars  to  be  furnished  under  sub-section  (1),  may 
relate to all or any of the following matters, namely, the amount of the deposits, the purposes and periods 
for which, and the rates of interest and other terms and conditions on which, such deposits are received. 

(3) Every housing finance institution which is a company receiving deposits, shall, if so required by 
the National Housing Bank and within such time as the National Housing Bank may specify, cause to be 
sent at the cost of such housing finance institution, a copy of its annual balance-sheet and profit and loss 
account or other annual accounts to every person from whom the housing finance institution which is a 
company holds, as on the last day of the year to which the accounts relate, deposits higher than such sum 
as may be specified by the National Housing Bank.] 

2[32. Duty of housing finance institutions to furnish statements, etc., under this Chapter.—Every 
housing  finance  institution  which  is  a  company  shall  furnish  the  statements,  information  or  particulars 
called for by the National Housing Bank or the Reserve Bank, as the case may be, and shall comply with 
any direction given to it under the provisions of this Chapter.] 

33. Powers and duties of auditors.—(1) The auditor of every 3[housing finance institution which is a 
company]  shall  enquire  whether  or  not  the  housing  finance  institution  has  furnished  to  4[the  National 
Housing Bank and the Reserve Bank] such statements, information or particulars relating to or connected 

1. Subs. by Act 23 of 2019, s. 159, for section 31 (w.e.f. 09-08-2019). 
2. Subs. by s. 160, ibid., for section 32 (w.e.f. 09-08-2019). 
3. Subs. by s. 161, ibid., for “housing finance institution” (w.e.f. 09-08-2019). 
4. Subs. by s. 161, ibid., for “the National Housing Bank” (w.e.f. 09-08-2019). 

18 

 
                                                           
with  deposits  received  by  it,  as  are  required  to  be  furnished  under  this  Chapter,  and  the  auditor  shall, 
except where he is satisfied on such enquiry that the  3[housing finance institution which is a company] 
has furnished such statements, information or particulars, make a report to  [the National Housing Bank 
and  the  Reserve  Bank]  giving  the  aggregate  amount  of  such  deposits  held  by  the  3[housing  finance 
institution which is a company]. 

1[(1A) The 2[Reserve Bank] may, on being satisfied that it is necessary so to do, in the public interest 
or in the interest of the depositors or for the purpose of proper assessment of the books of account, issue 
directions  to  any  housing  finance  institution  or  any  group  of  housing  finance  institutions  or  housing 
finance companies generally or to the auditors of such housing finance institution or institutions relating 
to  balance-sheet, profit  and  loss  account,  disclosure of  liabilities  in  the  books of  account  or  any  matter 
relating thereto.] 

(2)  Where, in  the  case  of a  housing  finance  institution,  being  a  company,  the  auditor  has  made,  or 
intends to make a report to 3[the National Housing Bank and the Reserve Bank] under sub-section (1), he 
shall  include  in  his  report  under  4[sub-section  (2)  of  section  143  of  the  Companies  Act,  2013  (18  of 
2013)], the contents of the report which he has made, or intends to make, to 3[the National Housing Bank 
and the Reserve Bank]. 

5[(3) Where the National Housing Bank is of the opinion that it is necessary so to do in the public 
interest  or  in  the  interest  of  the  housing  finance  institution  or  in  the  interest  of  the  depositors  of  such 
institution,  6[it  may  at  any  time  and  shall,  on  being  directed  to  do  so  by  the  Reserve  Bank,]  by  order, 
direct  that  a  special  audit  of  the  accounts  of  the  housing  finance  institution  in  relation  to  any  such 
transaction or class of transactions or for such period or periods, as may be specified in the order, shall be 
conducted  and  the  National  Housing  Bank  may  appoint  an  auditor  or  auditors  to  conduct  such  special 
audit and direct the auditor or the auditors to submit the report to it. 

(4) The remuneration of the auditors as may be fixed by the National Housing Bank, having regard to 
the nature and volume of work involved in the audit and the expenses of or incidental to the audit, shall be 
borne by the housing finance institution so audited.] 

7[33A. Power of Reserve Bank to prohibit acceptance of deposit and alienation of assets.—(1) If 
any  housing  finance  institution  which  is  a  company  violates  the  provisions  of  any  section  or  fails  to 
comply with any direction or order given by the National Housing Bank or the Reserve Bank, under any 
of  the  provisions  of  this  Chapter,  the  Reserve  Bank  may,  by  order,  prohibit  such  housing  finance 
institution from accepting any deposit. 

(2) Notwithstanding anything to the contrary contained in any agreement or instrument or any law for 
the  time  being  in  force,  the  Reserve  Bank  on  being  satisfied  that  it  is  necessary  so  to  do  in  the  public 
interest or in the interest of the depositors, may direct the housing finance institution which is a company, 
against  which  an  order  prohibiting  from  accepting  deposit  has  been  issued,  not  to  sell,  transfer,  create 
charge or mortgage or deal in any manner with its property and assets without prior written permission of 
the National Housing Bank for such period not exceeding six months from the date of the order.] 

33B.  Power  of  National  Housing  Bank  to  file  winding  up  petition.—(1)  The  National  Housing 

Bank, on being satisfied that a housing finance institution which is a company,— 

(a) is unable to pay its debt; or 

(b) has by virtue of the provisions of section 29A become disqualified to carry on the business of 

a housing finance institution; or 

1. Ins. by Act 15 of 2000, s. 16 (w.e.f. 12-6-2000). 
2. Subs. by Act 23 of 2019, s. 161, for “National Housing Bank” (w.e.f. 09-08-2019). 
3. Subs. by s. 161, ibid.,for “the National Housing Bank” (w.e.f. 09-08-2019). 
4. Subs. by Act 13 of 2018, s. 170, for “sub-section (2) of section 227 of the Companies Act, 1956 (1 of 1956)” (w.e.f. 1-6-2018). 
5. Ins. by Act 15 of 2000, s. 16 (w.e.f. 12-6-2000). 
6. Subs. by Act 23 of 2019, s. 161, for “it may at any time” (w.e.f. 09-08-2019). 
7. Subs. by s. 162,ibid., for section 33A (w.e.f. 09-08-2019). 

19 

 
                                                           
(c)  has  been  prohibited  by  1[the  National  Housing  Bank  or  the  Reserve  Bank]  from  receiving 

deposit by an order and such order has been in force for a period of not less than three months; or 

(d) the continuance of the housing finance institution is detrimental to the public interest or to the 

interest of depositors of the company,  

may  file  an  application  for  winding  up  of  such  housing  finance  institution  under  the  2[Companies  Act, 
2013 (18 of 2013)]. 

(2) A housing finance institution which is a company shall be deemed to be unable to pay its debt if it 
has refused or has failed to meet within five working days any lawful demand made at any of its offices or 
branches and the National Housing Bank certifies in writing that such company is unable to pay its debt. 

(3) A copy of every application made by the National Housing Bank under sub-section (1) shall be 

sent to 3[the Registrar of Companies and the Reserve Bank]. 

(4)  All  the  provisions  of  the  2[Companies  Act,  2013  (18  of  2013)]  relating  to  winding  up  of  a 
company  shall  apply  to  a  winding  up  proceeding  initiated  on  the  application  made  by  the  National 
Housing Bank under this provision.] 

34. Inspection.—(1) The National Housing Bank may, 4[at any time or on being directed so to do by 
the Reserve Bank, shall], cause an inspection to be made by one or more of its officers or employees or 
other  persons  (hereafter in  this section  referred  to as  the  inspecting  authority)  of  any  5[housing  finance 
institution  which  is  a  company],  for  the  purpose  of  verifying  the  correctness  or  completeness  of  any 
statement,  information  or  particulars  furnished  to  the  National  Housing  Bank  or  for  the  purpose  of 
obtaining  any  information  or  particulars  which  the  housing  finance  institution  has  failed  to  furnish  on 
being called upon to do so. 

(2) It shall be the duty of every director or member of any committee or other body or any person for 
the time being vested with the management of the whole or part of the affairs of every housing finance 
institution accepting deposits or other officer or employee  thereof to produce to the inspecting authority 
all such books, accounts and other documents in his custody or power and to furnish that authority with 
any statement and information relating to the business of the institution as that authority may require of 
him, within such time as may be specified by that authority. 

(3) The inspecting authority may examine on oath any director or member of any committee or body 
or any other person for the time being vested with the management of the affairs of the housing finance 
institution, accepting deposits, or any officer or employee thereof, in relation to its business. 

6[(4)  The  National  Housing  Bank  shall  submit  a  copy  of  the  report  of  inspection  referred  to  in  

sub-section (1) to the Reserve Bank.] 

35. Deposits not to be solicited by unauthorised persons.—No person shall solicit on behalf of any 
7[housing  finance  institution]  either  by  publishing  or  causing  to  be  published  any  prospectus  or 
advertisement or in any other manner deposits of money from the public unless— 

(a) he has been authorised in writing by the said housing finance institution to do so and specifies 

the name of the institution which has so authorised him; and 

(b)  the  prospectus  or  advertisement  complies  with  any  order  made  by  the  8[National  Housing 
Bank] under section 30 and with any other provision of law for the time being in force applicable to 
the publication of such prospectus or advertisement. 

1. Subs. by Act 23 of 2019, s. 163, for “the National Housing Bank” (w.e.f. 09-08-2019). 
2. Subs. by Act 13 of 2018, s. 171, for “Companies Act, 1956 (1 of 1956)” (w.e.f. 1-6-2018). 
3. Subs. by Act 23 of 2019, s. 163, for “the Registrar of Companies” (w.e.f. 09-08-2019). 
4. Subs. s.164,ibid., for “at any time” (w.e.f. 09-08-2019). 
5. Subs. by s. 164, ibid., for “housing finance institution accepting deposits” (w.e.f. 09-08-2019). 
6. Ins. by s. 164, ibid. (w.e.f. 09-08-2019). 
7. Subs. by s. 165, ibid., for “housing finance institution” (w.e.f. 09-08-2019). 
8. Subs. by s. 165, ibid., for “National Housing Bank” (w.e.f. 09-08-2019). 

20 

 
 
 
                                                           
1[35A.  Disclosure  of information.—(1)  Any  information  relating  to a  2[housing  finance institution 

which is a company],— 

(a) contained in any statement or return submitted by such institution under the provisions of this 

Chapter; or 

(b)  obtained  through  audit  or  inspection  or  otherwise  by  3[the  National  Housing  Bank  or  the 

Reserve Bank, as the case may be,] 

shall be treated as confidential and shall not, except otherwise provided in this section, be disclosed. 

(2) Nothing in this section shall apply to— 

(a)  the  disclosure  by  any  7[housing  finance  institution  which  is  a  company],  with  the  previous 
permission  of  8[the  National  Housing  Bank  or  the  Reserve  Bank,  as  the  case  may  be],  of  any 
information furnished to 8[the National Housing Bank or the Reserve Bank, as the case may be] under  
sub-section (1); 

(b) the publication by 4[the National Housing Bank or the Reserve Bank, as the case may be], if it 
considers  necessary  in  the  public  interest  so  to  do,  of  any  information  collected  by  it  under  
sub-section  (1)  in  such  consolidated  form  as  it  may  think  fit  without  disclosing  the  name  of  any 
5[housing finance institution which is a company] or its borrowers; 

(c) the disclosure by the  2[housing finance institution which is a company] or by  1[the National 
Housing  Bank  or  the  Reserve  Bank,  as  the  case  may  be]  of  any  such  information  to  any  other 
2[housing  finance  institution  which  is  a  company]  or  in  accordance  with  the  practice  and  usage 
customary amongst such institutions or as permitted or required under any other law: 

Provided that any such information received by a  2[housing finance institution which is a company] 
under  this  clause  shall  not  be  published  except  in  accordance  with  the  practice  and  usage  customary 
amongst institutions or as permitted or required under any other law. 

(3) Notwithstanding anything contained in this Act or in any other law for the time being in force, 
1[the National Housing Bank or the Reserve Bank, as the case may be], if it is satisfied that, in the public 
interest or in the interest of the depositors or the  2[housing finance institution which is a company] or to 
prevent the affairs of any 2[housing finance institution which is a company] being conducted in a manner 
detrimental to the interest of the depositors, it is expedient so to do, may, either on its own motion or on 
being  requested,  furnish  or  communicate  any  information  relating  to  the  conduct  of  business  by  any 
2[housing finance institution which is a company] to any authority constituted under any law. 

(4)  Notwithstanding  anything  contained  in  any  other  law  for  the  time  being  in  force,  no  court  or 
tribunal  or  other  authority  shall  compel  1[the  National  Housing  Bank  or  the  Reserve  Bank,  as  the  case 
may  be]  to  produce  or to give  inspection  of  any  statement  or  other  material  obtained  by  1[the  National 
Housing Bank or the Reserve Bank, as the case may be] under any provision of this Chapter. 

6[35B. Power of Reserve Bank to exempt housing finance institution.—(1) The Reserve Bank, on 
being satisfied that it is necessary so to do, may declare by notification that all or any of the provisions of 
this  Chapter  shall  not  apply  to  a  housing  finance  institution  which  is  a  company  or  a  group  of  such 
housing  finance  institutions  either  generally  or  for  such  period  as  may  be  specified,  subject  to  such 
conditions, limitations or restrictions as it may think fit to impose. 

1. Ins. by Act 15 of 2000, s. 18 (w.e.f. 12-6-2000). 
2. Subs. by Act 23 of 2019, s. 166, for “housing finance institution” (w.e.f. 09-08-2019). 
3. Subs. by s. 166, ibid., for “the National Housing Bank” (w.e.f. 09-08-2019). 
4. Subs. by s. 166, ibid.,for “the National Housing Bank” (w.e.f. 09-08-2019). 
5. Subs. by s. 166, ibid., for “housing finance institution” (w.e.f. 09-08-2019). 
6. Subs. by s. 167, ibid., for section 35B (w.e.f. 09-08-2019). 

21 

 
                                                           
(2) Every notification made under this section shall be laid, as soon as may be after it is made, before 

each House of Parliament.] 

36.  Chapter  V  to  override  other  laws.—The  provisions  of  this  Chapter  shall  have  effect 
notwithstanding anything inconsistent therewith contained in any other law for the time being in force or 
any instrument having effect by virtue of any such law. 

1[36A.  Power  to  order  repayment  of  deposit.—(1)  Every  deposit  accepted  by  a  housing  finance 
institution  which  is  a  company  unless  renewed,  shall  be  repaid  in  accordance  with  the  terms  and 
conditions of such deposit. 

(2) Where a housing finance institution which is a company has failed to repay any deposit or part 
thereof in accordance with the terms and conditions of such deposit, such officer of the National Housing 
Bank,  as  may  be  authorised  by  the  Central  Government  for  the  purpose  of  this  section  (hereinafter 
referred  to  as  the  “authorised  officer”)  may,  if  he  is  satisfied,  either  on  his  own  motion  or  on  any 
application of the depositor, that it is necessary so to do to safeguard the interests of the housing finance 
institution,  the  depositors  or  in  the  public  interest,  direct,  by  order,  such  housing  finance  institution  to 
make  repayment  of  such  deposit  or  part  thereof  forthwith  or  within  such  time  and  subject  to  such 
conditions as may be specified in the order: 

Provided  that  the  authorised  officer  may,  before  making  any  order  under  this  sub-section,  give  a 
reasonable opportunity of being heard to the housing finance institution and the other persons interested 
in the matter. 

36B. Nomination by depositors.—(1) Where a deposit is held by a housing finance institution to the 
credit  of  one  or  more  persons,  the  depositor  or,  as  the  case  may  be,  all  the  depositors  together  may 
nominate, in the manner prescribed by rules made by the Central Government under section 45ZA of the 
Banking  Regulation  Act,  1949  (10  of  1949)  one  person  to  whom  in  the  event  of  the  death  of  the  sole 
depositor or the death of all the depositors, the amount of deposit may be returned by the housing finance 
institution. 

(2)  Notwithstanding  anything  contained  in  any  other  law  for  the  time  being  in  force,  or  in  any 
deposition,  whether  testamentary  or  otherwise,  in  respect  of  such  deposit,  where  a  nomination  made 
purports  to  confer  on  any  person  the  right  to  receive  the  amount  of  deposit  from  the  housing  finance 
institution, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all 
the  depositors,  become  entitled  to  all  the  rights  of  the  sole  depositor  or,  as  the  case  may  be,  of  the 
depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied 
or cancelled in the manner prescribed by rules made by the Central Government under section 45ZA of 
the Banking Regulation Act, 1949 (10 of 1949). 

(3)  Where  the  nominee  is  a  minor,  it  shall  be  lawful  for  the  depositor  making  the  nomination  to 
appoint, in the manner prescribed by rules made by the Central Government under section 45ZA of the 
Banking Regulation Act, 1949 (10 of 1949), any person to receive the amount of deposit in the event of 
his death during the minority of the nominee. 

(4) Payment by a housing finance institution in accordance with the provisions of this section shall 

constitute a full discharge to the housing finance institution of its liability in respect of the deposit: 

Provided that nothing contained in this sub-section shall affect the right or  claim which any person 

may have against the person to whom any payment is made under this section. 

1. Ins. by Act 15 of 2000, s. 19 (w.e.f. 12-6-2000). 

22 

 
                                                           
(5) No notice of the claim of any person, other than the person or persons in whose name a deposit is 
held by the housing finance institution, shall be receivable by the housing finance institution, nor shall the 
housing finance institution be bound by any such notice even though expressly given to it: 

Provided  that  where  any  decree,  order,  certificate  or  other  authority  from  a  court  of  competent 
jurisdiction relating to such deposit is produced before a housing finance institution, the housing finance 
institution shall take due note of such decree, order, certificate or other authority.] 

1[CHAPTER VA 

OTHERPROVISIONSRELATINGTO HOUSING FINANCE INSTITUTIONS 

36C. Definitions.—In this Chapter, unless the context otherwise requires,— 

(a) “Appellate Tribunal” means the Appellate Tribunal established under section 36-I; 

(b) “approved institution” means— 

(i)  a  housing  finance  institution  which  has  been  granted  a  certificate  of  registration  under                 

sub-section (5) of section 29A; 

(ii) a scheduled bank; 

(iii) National Housing Bank acting as trustee or otherwise in a transaction of securitisation of 

housing mortgages undertaken by the National Housing Bank; 

(iv)  such  other  institutions  as  the  Central  Government  may,  on  the  recommendation  of  the 

National Housing Bank, by notification, specify; 

(c)  “assistance”  means  any  direct  or  indirect  financial  assistance  granted,  by  an  approved 

institution during the course of any housing finance activity undertaken by it; 

(d)  “borrower”  means  any  person  to  whom  any  assistance  has  been  given  by  an  approved 
institution for the purposes of purchase, construction, repairs, extension or renovation of a residential 
house; 

(e) “dues” means any liability which is claimed as due from any person by an approved institution 

and includes interest, costs, charges and other amount payable in relation thereto; 

(f) “recovery officer” means an officer appointed under section 36D. 

 36D. Appointment of recovery officer.—(1) The Central Government may, in consultation with the 
National  Housing  Bank,  by  notification  appoint  such  persons  being  the  officers  of  the  approved 
institution, as it may deem fit, to be recovery officers for the purpose of this Chapter who shall have such 
qualifications as the Central Government may by rules made under this Act specify. 

(2) The local limits within which the recovery officer shall exercise the powers conferred and perform 
the  duties  imposed  on  by  or  under  this  Chapter  shall  be  such  as  may  be  specified  by  the  Central 
Government by notification.  

36E. Application to the recovery officer.—(1) Where any borrower, who is under a liability to an 
approved  institution  under  an  agreement,  makes  any  default  in  repayment  of  any  assistance  or  any 
instalment thereof or otherwise fails to comply with the terms of said agreement, then, without prejudice 
to the provisions of section 69 of the Transfer of Property Act, 1882 (4 of 1882), the approved institution 
may  apply,  to  the  recovery  officer  within  the  limits  of  whose  jurisdiction  the  borrower  actually  and 
voluntarily resides, or carries on business, or personally works for gain, or the cause of action wholly or 

1. Ins. by Act 15 of 2000, s. 20 (w.e.f. 12-6-2000). 

23 

 
 
                                                           
in part arises, for the sale of the property pledged, mortgaged, hypothecated or assigned to the approved 
institution as security for the dues. 

(2)  Where  an  approved  institution,  which  has  to  recover  its  dues  from  any  borrower,  has  filed  an 
application  to  the  recovery  officer  under  sub-section  (1)  and  the  same  property  is  also  pledged, 
mortgaged,  hypothecated  or  assigned  to  another  approved  institution  or  person,  the  other  approved 
institution  or  person  may  join  the  approved  institution  at  any  stage  of the  proceedings,  before  the  final 
order is passed, by making an application to that recovery officer. 

(3) In the application under sub-section (1) or sub-section (2), the nature and extent of the liability of 
the borrower to the approved institution or person, the grounds on which it is made shall be stated and it 
be in such form and be accompanied by such documents or other evidence as may be prescribed. 

 36F.  Procedure  in  respect  of  application  under  section  36E.—(1)  On  receipt  of  an  application 
under  section  36E,  if  the  recovery  officer  is  of  opinion  that  the  borrower  is  under  a  liability  to  an 
approved  institution  under  an  agreement,  or  has  made  default  in  repayment  of  the  assistance  or  any 
instalment thereof or has otherwise failed to comply with the terms of said agreement, he shall cause a 
written notice of demand in such form as may be prescribed to be served on the borrower, calling upon 
him  to  pay  the  amount  specified  in  the  notice  within  a  period  of  ninety  days  from  the  date  of  service 
thereof or to show cause as to why the relief prayed for should not be granted. 

(2)  The  recovery  officer  may  after  giving  the  applicant  and  the  borrower  an  opportunity  of  being 
heard,  pass  such interim  or  final  order,  including  the  order  for  payment  of  interest  from  the  date on  or 
before which payment of the amount is found due up to the date of realisation or actual payment, on the 
application as it thinks fit to meet the ends of justice. 

(3)  The  recovery  officer  may  also  consider  and  if  satisfied,  allow  any  claim  of  set-off  or  counter-

claim set up by the borrower against the approved institution or person. 

(4) The recovery officer shall supply a copy of every order passed by it to the approved institution 

and the borrower. 

(5)  The  recovery  officer  may  make  an  interim  order  (whether  by  way  of  injunction  or  stay  or 
attachment) against the borrower to debar him from transferring, alienating or otherwise dealing with or 
disposing  of,  any  property  which  is  pledged,  mortgaged,  hypothecated  or  assigned  to  the  approved 
institution as security for the dues. 

(6)  The  application  made  to  the  recovery  officer  under  section  36E  shall  be  dealt  with  by  him  as 
expeditiously as possible and endeavour shall be made by him to dispose of the application finally within 
six months from the date of receipt of the application. 

 36G.  Enforcement  of  order  of  recovery  officer.—(1)  Where  the  borrower  refuses  or  fails  to 
comply with the order within the time specified therein the recovery officer may, take possession of any 
property  pledged,  mortgaged,  hypothecated  or  assigned  to  the  approved  institution  as  security  for  any 
assistance in respect of which default has been made and transfer by way of sale, lease or otherwise such 
property. 

(2)  Any  transfer  by  way  of  sale,  lease  or  otherwise  under  this  section  shall  be  conducted  in  such 

manner as may be prescribed. 

(3) Any transfer of property made by the recovery officer, in exercise of its powers under sub-section 
(1), shall vest in the transferee all rights in or to the property transferred, as if the transfer has been made 
by the owner of the property. 

(4) Where any action has been taken against the borrower under the provisions of sub-section (1), all 
costs, charges, expenses which in the opinion of the recovery officer have been properly incurred by him 
as incidental thereto, shall be recoverable from the borrower and the money which is received by it shall, 
in the absence of any contract to the contrary, be held by it in trust to  be applied firstly, in payment of 

24 

 
such costs, charges and expenses and secondly, in discharge of debt, due to the approved institution, and 
the residue of the money so received shall be paid to the person entitled thereto. 

(5) If the dues of the approved institution, together with all costs, charges and expenses incurred by 
the recovery officer, are tendered to the approved institution or to the recovery officer at any time before 
the date fixed for sale or transfer, the property shall not be sold or transferred, and no further steps shall 
be taken for transfer or sale of that property. 

36H. Chief Metropolitan Magistrate and District Magistrate to assist recovery officer in taking 
charge of property.—(1) Where any property is sold or leased in pursuance of any power conferred by 
section 36E, the recovery officer may, for the purpose of taking into custody or under control any such 
property, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose 
jurisdiction  any  such  property  or  other  documents  relating  thereto  may  be  situated  or  found  to  take 
possession thereof, and the Chief Metropolitan Magistrate or as the case may be, the District Magistrate 
shall, on such request being made to him,— 

(a) take possession of such property and documents relating thereto; and 

(b) forward them to the recovery officer. 

(2)  For  the  purpose  of  securing  compliance  with  the  provisions  of  sub-section  (1),  the  Chief 
Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or 
cause to be used, such force, as may, in his opinion, be necessary. 

(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this 

section shall be called in question in any court or before any authority. 

36-I.  Establishment  of  Appellate  Tribunal.—(1)  The  Central  Government  shall,  by  notification, 
establish  one  or  more  Appellate  Tribunals,  to  be  known  as  the  Housing  Finance  Institutions  Debt 
Recovery  Appellate  Tribunals,  to  exercise  the  jurisdiction,  powers  and  authority  conferred  on  such 
Tribunal by or under this Act. 

(2) The  Central  Government  shall also  specify  in  the  notification referred  to  in sub-section  (1), the 

areas in relation to which the Appellate Tribunal may exercise jurisdiction. 

(3)  Notwithstanding  anything  contained  in  sub-sections  (1)  and  (2),  the  Central  Government  may 
authorise the Presiding Officer of an Appellate Tribunal to discharge also the functions of the Presiding 
Officer of other Appellate Tribunal. 

36J. Composition of Appellate Tribunal.—An Appellate Tribunal shall consist of one person only 
(hereinafter  referred  to  as  the  Presiding  Officer  of  the  Appellate  Tribunal)  to  be  appointed,  by 
notification, by the Central Government. 

36K. Qualifications for appointment as Presiding Officer of Appellate Tribunal.—A person shall 

not be qualified for appointment as the Presiding Officer of an Appellate Tribunal, unless he— 

(a) is, or has been, or is qualified to be a District Judge; 

(b) has been a Member of the Indian Legal Service and has held a post in Grade II of that Service 

for at least three years. 

36L. Term of office.—The Presiding Officer of an Appellate Tribunal shall hold office for a term of 
five years from the date on which he enters upon his office or until he attains the age of sixty-five years, 
whichever is earlier. 

36M.  Staff  of  Appellate  Tribunal.—(1)  The  Central  Government  shall  provide  the  Appellate 

Tribunal with such officers and other employees as that Government may think fit. 

25 

 
(2) The officers and other employees of the Appellate Tribunal shall discharge their functions under 

the general superintendence of the Presiding Officer. 

(3) The salaries and allowances and other conditions of service of the officers and other employees of 
the  Appellate  Tribunal  shall  be  such  as  the  Central  Government  may  by  rules  made  under  this  Act 
specify. 

36N. Salaries and allowances and other terms and conditions of service of Presiding Officers.—
The salary and allowances payable to and the other terms and conditions of service (including pension, 
gratuity and other retirement benefits) of, the Presiding Officer of an Appellate Tribunal shall be such as 
the Central Government may by rules made under this Act specify: 

Provided  that  neither  the  salary  and  allowances  nor  the  other  terms  and  conditions  of  a  Presiding 

Officer shall be varied to his disadvantage after appointment. 

36-O. Filling up of vacancies.—If, for any reason other than temporary absence, any vacancy occurs 
in the office of the Presiding Officer of an Appellate Tribunal, then the Central Government shall appoint 
another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may 
be continued before the Appellate Tribunal from the stage at which the vacancy is filled. 

36P. Resignation and removal.—(1) The Presiding Officer of an Appellate Tribunal may, by notice 

in writing under his hand addressed to the Central Government, resign his office: 

Provided that the said Presiding Officer shall, unless he is permitted by the Central Government, to 
relinquish  his  office  sooner,  continue  to  hold  office  until  the  expiry  of  three  months  from  the  date  of 
receipt of such notice or until a person duly appointed as his successor enters upon his office or until the 
expiry of his term of office, whichever is earliest. 

(2) The Presiding Officer of an Appellate Tribunal shall not be removed from his office except by an 
order made by the Central Government on the ground of proved misbehaviour or incapacity after enquiry 
made  by  a  Judge  of  a  High  Court  in  which  the  Presiding  Officer  concerned  has  been  informed  of  the 
charges against him and given a reasonable opportunity of being heard in respect of the charges. 

(3)  The  Central  Government  may,  by  rules  made  under  this  Act,  regulate  the  procedure  for  the 

investigation of misbehaviour or incapacity of the aforesaid Presiding Officer. 

36Q. Orders constituting Appellate Tribunal to be final and not to invalidate its proceedings.—
No  order  of  the  Central  Government  appointing  any  person  as  the  Presiding  Officer  of  an  Appellate 
Tribunal shall be called in question in any manner, and no act or proceeding before an Appellate Tribunal 
shall be called in question in any manner on the ground merely of any defect in the establishment of an 
Appellate Tribunal. 

36R.  Jurisdiction,  powers  and  authority  of  Appellate  Tribunal.—An  Appellate  Tribunal  shall 
exercise the jurisdiction, powers and authority to entertain appeals against any order made or deemed to 
have been made by the recovery officer under this Act. 

36S. Appeal to the Appellate Tribunal.—(1) Any person aggrieved by an order made or deemed to 
have been made by the recovery officer under this Chapter, may prefer an appeal to an Appellate Tribunal 
having jurisdiction in the matter. 

(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date 
on which a copy of the order made or deemed to have been made by the recovery officer is received by 
him and it shall be in such form and be accompanied by such fee as may be prescribed: 

Provided  that  the  Appellate  Tribunal  may  entertain  an  appeal  after the  expiry  of  the  said  period  of 

forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. 

(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties 
to  the  appeal,  an  opportunity  of  being  heard,  pass  such  orders  thereon  as  it  thinks  fit,  confirming, 
modifying or setting aside the order appealed against. 

26 

 
(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and 

to the concerned recovery officer. 

(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as 
expeditiously  as  possible and  endeavour  shall  be  made  by  it  to  dispose  of the appeal  finally  within  six 
months from the date of the receipt of the appeal. 

36T. Deposit of amount due, on filing appeal.—Where an appeal is preferred by a borrower, such 
appeal  shall  not  be  entertained  by  the  Appellate  Tribunal  unless  such  person  has  deposited  with  the 
Appellate  Tribunal  seventy-five  per  cent.  of  the  amount  due  from  him  as  determined  by  the  recovery 
officer: 

Provided that the Appellate Tribunal may, for the reasons to be recorded in writing, waive or reduce 

the amount to be deposited under this section. 

36U.  Procedure  and  powers  of  recovery  officer  and  Appellate  Tribunal.—(1)  The  recovery 
officer and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil 
Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the 
other provisions of this Act and of any regulations, the recovery officer and the Appellate Tribunal shall 
have powers to regulate their own procedure including the places at which they shall have their sittings. 

(2) The recovery officer and the Appellate Tribunal shall have, for the purposes of discharging their 
functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 
1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:— 

(a) summoning and enforcing the attendance of any person and examining him on oath; 

(b) requiring the discovery and production of documents; 

(c) receiving evidence on affidavits; 

(d) issuing commissions for the examination of witnesses or documents; 

(e) reviewing its decisions; 

(f) dismissing an application for default or deciding it ex parte; 

(g) setting aside any order of dismissal of any application for default or any order passed by it ex 

parte; and 

(h) any other matter which may be prescribed. 

(3)  Any  proceeding  before  the  recovery  officer  or  the  Appellate  Tribunal  shall  be  deemed  to  be  a 
judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of the 
Indian Penal Code (45 of 1860), and the recovery officer or the Appellate Tribunal shall be deemed to be 
a civil court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 
1973 (2 of 1974). 

36V. Limitation.—The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, 

apply to an application made to recovery officer. 

36W. Presiding Officer,  recovery  officer,  other officers and  employees  to  be  public  servant.—
The  Presiding  Officer,  other  officers  and  employees  of  an  Appellate  Tribunal  and  the  recovery  officer 
shall  be  deemed  to  be  public  servants  within  the  meaning  of  section  21  of  the  Indian  Penal  Code                   
(45 of 1860). 

36X.  Protection  of  action  taken  in  good  faith.—No  suit,  prosecution  or  other  legal  proceedings 
shall  lie  against  the  Central  Government  or  against  the  Presiding  Officer  of  an  Appellate  Tribunal  or 
against the recovery officer for anything which is in good faith done or intended to be done in pursuance 
of the provisions of this Act or any rule or regulation or order made thereunder. 

36Y.  Bar  of  jurisdiction.—No  Court  or  other  authority  shall  have,  or  be  entitled  to  exercise,  any 
jurisdiction,  powers  or  authority  (except  the  Supreme  Court,  and  a  High  Court  exercising  jurisdiction 
under articles 226 and 227 of the Constitution) in relation to the matters specified in this Chapter. 

27 

 
36Z.  Transitional  provisions.—Notwithstanding  anything  contained 

the 
establishment  of  the  Appellate  Tribunal  under  section  36-I  for  any  area,  the  Appellate  Tribunal 
established under section 8 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 
(51  of  1993)  and  which  is  functioning  in  that  area  shall  exercise  the jurisdiction,  powers  and  authority 
conferred on the Appellate Tribunal under this Act.] 

this  Act, 

till 

in 

CHAPTER VI 

FUNDS, ACCOUNTS AND AUDIT 

37. General Fund and other funds.—(1) With effect from such date as  1[the Central Government] 
may  specify,  the  National  Housing  Bank  shall  establish  a  fund  to  be  called  the  General  Fund  and  all 
payments by the National Housing Bank shall be made out of the said General Fund. 

(2) The Board may, and shall, if so directed by  1[the Central Government], create a special fund or a 

reserve fund or such other funds as may be prescribed. 

38.  Preparation  of  balance  sheet,  etc.,  of  National  Housing  Bank.—(1)  The  balance  sheet  and 
accounts of the National Housing Bank shall be prepared and maintained in such form and manner as may 
be prescribed. 

(2) The Board shall cause the books and accounts of the National Housing Bank to be balanced and 

closed as on the thirtieth day of June, each year. 

39. Disposal of surplus.—After making provision for bad and doubtful debts, depreciation of assets 
and all other matters for which provision is necessary or expedient or which is usually provided for by 
bankers, the National Housing Bank shall transfer— 

(i) for a period of fifteen years, following the accounting year during which the National Housing 
Bank is established, the amount  remaining (hereafter in this section referred to as surplus) such of the 
funds referred to in section 37 as the Reserve Bank may specify; and 

(ii)  after  the  expiry  of  the  said  period  of  fifteen  years,  the  National  Housing  Bank  shall,  after 
making  provision  for  the  funds  referred  to  in  section  37,  transfer  the  balance  of  surplus  to  2[the 
Central Government]. 

40.  Audit.—(1)  The  accounts  of  the  National  Housing  Bank  shall  be  audited  by  auditors  duly 
qualified  to  act  as  auditors  under  3[sub-section  (1)  of  section  141  of  the  Companies  Act,  2013  (18  of 
2013)],  who  shall  be  appointed  by  the  Reserve  Bank,  for  such  term  and  on  such  remuneration  as  the 
Reserve Bank may fix. 

(2) The auditors shall be supplied  with a copy of the annual balance sheet of the National Housing 
Bank and it shall be their duty to examine it together with the accounts and vouchers relating thereto and 
they shall have a list delivered to them of all books kept by the National Housing Bank and shall at all 
reasonable  times  have  access  to  the  books,  accounts,  vouchers  and  other  documents  of  the  National 
Housing Bank. 

(3) The auditors may, in relation to the accounts of the National Housing Bank, examine any director 
of  the  Board  or  any  officer  or  other  employee  of  the  National  Housing  Bank  and  shall  be  entitled  to 
require from the Board or officers or other employees of the National Housing Bank such information and 
explanation as they may think necessary for the performance of their duties. 

(4) The auditors shall make a report to the National Housing Bank upon the annual balance sheet and 
accounts examined by them and in every such report, they shall state whether in their opinion the balance 
sheet is a full and fair balance sheet containing all necessary particulars and properly drawn up so as to 
exhibit  a  true  and  fair  view  of  the  state  of  affairs  of  the  National  Housing  Bank  and  in  case  they  had 
called for any explanation or information from the Board or any officer or other employee of the National 
Housing Bank, whether it was given and whether it was satisfactory. 

1. Subs. by Act 13 of 2018, s. 172, for “the Reserve Bank” (w.e.f. 1-6-2018). 
2. Subs. by s. 173, ibid., for““the Reserve Bank” (w.e.f. 1-6-2018). 
3. Subs. by s. 174,ibid., for “sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956)” (w.e.f. 1-6-2018). 

28 

 
                                                           
(5) The National Housing Bank shall furnish to the Central Government and the Reserve Bank within 
1[four months] from the date on which the annual accounts of the National Housing Bank are closed and 
balanced, a copy of its balance sheet as on the close of the relevant year together with a copy of the profit 
and loss account for the year and a copy of the auditors’ report and a report of the working of the National 
Housing  Bank  during  that  year,  and  the  Central  Government  shall,  as  soon  as  may  be  after  they  are 
received by it, cause the same to be laid before each House of Parliament. 

(6) Without  prejudice to anything  contained in the preceding  sub-sections,  the Central  Government 
may, at any time, appoint the Comptroller and Auditor-General of India to examine and report upon the 
accounts  of  the  National  Housing  Bank  and  any  expenditure  incurred  by  him  in  connection  with  such 
examination and report shall be payable by the National Housing Bank to the Comptroller and Auditor-
General of India.  

41. Returns.—The National Housing Bank shall furnish, from time to time, to the Reserve Bank such 

information and returns as the Reserve Bank may require. 

42.  Annual  report  on  housing.—The  National  Housing  Bank  shall  make  an  annual  report  to  the 
Central Government and the Reserve Bank on the trend and progress of housing in the country and in that 
report may make such suggestions as it may think necessary or expedient for the development of housing 
and the Central Government shall, as soon as may be after the report is received by it, cause the same to 
be laid before each House of Parliament. 

CHAPTER VII 

MISCELLANEOUS 

43. Staff of National Housing Bank.—(1) The National Housing Bank may appoint such number of 
officers  and  other  employees  as  it  considers  necessary  or  desirable  for  the  efficient  performance  of  its 
functions and determine the terms and conditions of their appointment and service. 

(2) The duties and conduct, terms and conditions of service and the establishment and maintenance of 
provident fund or any other fund for the benefit of the officers and other members of staff of the National 
Housing Bank shall be such as may be prescribed. 

(3) The National Housing Bank may depute any officer or any member of its staff for such period and 
on  such  terms  and  conditions  as  it  may  determine,  to  any  institution  including  a  housing  finance 
institution. 

(4) Nothing contained in this section shall empower the National Housing Bank to depute any officer 
or member of its staff to any institution on any salary, emoluments or other terms and conditions which is 
or  are  less  favourable  to  him  than  that  or  those  to  which  he  is  entitled  to  immediately  before  such 
deputation. 

(5) The National Housing Bank may 2*** receive or take on deputation any officer or other employee 
from  any  institution  including  a  housing  finance  institution  for  such  period  and  on  such  terms  and 
conditions as it may think necessary in the interest of the National Housing Bank. 

3[43A. Delegation of powers.—The Board may, by general or special order, delegate to an officer or 
officers  of  the  National  Housing  Bank,  subject  to  such  conditions  and  limitations,  if  any,  as  may  be 
specified in the order, such of its powers and duties under this Act as it may deem necessary.] 

44. Obligation as to fidelity and secrecy.—(1) The 4[National Housing Bank or the Reserve Bank, 
as  the  case  may  be,]  shall  not,  except  as  otherwise  required  by  this  Act  or  any  other  law,  divulge  any 
information  relating  to,  or  to  the  affairs  of,  its  constituents  except  in  circumstances  in  which  it  is,  in 
accordance with the law or practice and usage customary among bankers, necessary or appropriate for the 
2[National Housing Bank or the Reserve Bank, as the case may be,] to divulge such information. 

1. Subs. by Act 15 of 2000, s. 21, for “three months” (w.e.f. 12-6-2000). 
2. The words, figures and letters “, without prejudice to the provisions of section 54AA of the Reserve Bank of India Act, 1934 (2 

of 1934),” Omitted by Act 13 of 2018, s. 175, (w.e.f. 1-6-2018). 

3. Ins. by Act 15 of 2000. s. 22 (w.e.f. 12-6-2000). 
4. Subs. by Act 23 of 2019, s. 168, for “National Housing Bank” (w.e.f. 09-08-2019). 

29 

 
                                                           
 
(2) Every director, member of a committee, auditor, adviser, officer or other employee of the National 
Housing Bank or of the Reserve Bank, whose services are utilised by the National Housing Bank under 
the  provisions  of  this  Act,  shall,  before  entering  upon  his  duties,  make  a  declaration  of  fidelity  and 
secrecy in the form set out in the First Schedule to this Act. 

1[(3) Nothing contained in this section shall apply to the credit information disclosed under the Credit 

Information Companies (Regulation) Act, 2005.] 

45. Defects in appointment not to invalidate acts, etc.—(1) No act or proceeding of the Board or of 
any committee of the National Housing Bank shall be questioned on the ground merely of the existence of 
any vacancy in, or defect in the constitution of, the Board or the committee, as the case may be. 

(2) No act done by any person acting in good faith as a director of the Board or as a member of a 
committee  of  the  National  Housing  Bank  shall  become  invalid  merely  on  the  ground  that  he  was 
disqualified to be a director or that there was any other defect in his appointment. 

2[45A. Arrangement with National Housing Bank on appointment of directors to prevail.—(1) 
Where  any  arrangement  entered  into  by  the  National  Housing  Bank  with  a  housing  finance  institution 
which is a company provides for the appointment by the National Housing Bank of one or more directors 
of such housing finance institution, such provision and any appointment of directors made in pursuance 
thereof shall be valid and effective notwithstanding anything to the contrary contained in the 3[Companies 
Act, 2013 (18 of 2013)] or in any other law for the time being in force or in the memorandum, articles of 
association or any other instrument relating to that housing finance institution, or any provision regarding 
share  qualification,  age  limit,  number  of  director-ships,  removal  from  office  of  directors  and  such  like 
conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by 
the National Housing Bank in pursuance of the arrangement as aforesaid. 

(2) Any director appointed as aforesaid shall— 

(a)  hold  office  during  the  pleasure  of  the  National  Housing  Bank  and  may  be  removed  or 

substituted by any person by order in writing of the National Housing Bank; 

(b)  not  incur  any  obligation  or  liability  by  reasons  only  of  his  being  a  director  or  for  anything 
done or omitted to be done in good faith in the discharge of his duties as a director or anything in 
relation thereto; 

(c) not be liable to retirement by rotation and shall not be taken into account for computing the 

number of directors liable to such retirement.] 

46. Protection of action taken under the Act.—No suit or other legal proceeding shall lie against 
the  National  Housing  Bank  or  any  director  or  any  officer  or  other  employee  of  4[the  National  Housing 
Bank or the Reserve Bank] or any other person authorised by 1[the National Housing Bank or the Reserve 
Bank] to discharge any functions under this Act for any loss or damage caused or likely to be caused by 
anything which is in good faith done or intended to be done in pursuance of this Act or of any other law 
or provision having the force of law. 

47. Indemnity of directors.—(1) Every director shall be indemnified by the national Housing Bank 
against all losses and expenses incurred by him in, or in relation to, the discharge of his duties, except 
such as are caused by his own wilful act or default. 

(2) A director shall not be responsible for any other director or for any officer or other employee of 
the National Housing Bank or for any loss or expenses resulting to the National Housing Bank from the 
insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf 
of  the  National  Housing  Bank  or  the  insolvency  or  wrongful  act  of  any  debtor  or  any  person  under 
obligation to the National Housing Bank or of anything done in good faith in the execution of the duties 
of his office in relation thereto. 

1. Ins. by Act 30 of 2005, s.  34 and the Schedule (w.e.f.  14-10-2006). 
2. Ins. by Act 15 of 2000, s. 23 (w.e.f. 12-6-2000). 
3. Subs. by Act 13 of 2018, s. 176, for “Companies Act, 1956 (1 of 1956)” (w.e.f. 1-6-2018). 
4. Subs. by Act 23 of 2019, s. 169, for “the National Housing Bank” (w.e.f. 09-08-2019). 

30 

 
                                                           
1[47A. Nomination in respect of deposits, bonds, etc.—(1) Notwithstanding anything contained in 
any other law for the lime being in force, where a nomination in respect of any  deposit, bonds or other 
securities  is  made  with  the  National  Housing  Bank  in  the  prescribed  manner,  the  amount  due  on  such 
deposits, bonds or securities shall, on the death of the depositor or holder thereof, vest in, and be payable 
to,  the  nominee  subject  to  any  right,  title  or  interest  of  any  other  person  to  such  deposits,  bonds  or 
securities. 

(2)  Any  payment  made  by  the  National  Housing  Bank  in  accordance  with  the  provisions  of  sub-

section (1) shall be a full discharge of its liability in respect of such deposits, bonds or securities.] 

48.[Explanation from tax on income.]—Omitted by the Finance Act, 2001 (14 of 2001), s. 141 (w.e.f. 

1-4-2002). 

49. Penalties.—(1) Whoever in any return, balance-sheet, or other document or in any information 
required  or  furnished  by  or  under  or  for  the  purposes  of  any  provision  of  this  Act,  wilfully  makes  a 
statement  which  is  false  in  any  material  particular,  knowing  it  to  be  false,  or  wilfully  omits  to  make  a 
material statement, shall be punishable with imprisonment for a term which may extend to three years and 
shall also be liable to fine. 

(2) If any person fails to produce any book, account or other document, or to furnish any statement or 
information  which,  under  the  provisions  of  this  Act,  it  is  his  duty  to  produce  or  furnish,  he  shall  be 
punishable with fine which may extend to two thousand rupees in respect of each offence and in the case 
of  a continuing  failure,  with  an  additional  fine  which  may  extend to  one  hundred  rupees  for  every  day 
during which the failure continues after conviction for the first such failure. 

2[(2A)  If  any  person  contravenes  the  provisions  of  sub-section  (1)  of  section  29A,  he  shall  be 
punishable with imprisonment for a term which shall not be less than one year but which may extend to 
five years and with fine which shall not be less than one lakh rupees but which may extend to five lakh 
rupees. 

(2B) If any auditor fails to comply with any direction given or order made by  3[the National Housing 
Bank or the Reserve Bank] under section 33, he shall be punishable with fine which may extend to five 
thousand rupees. 

(2C) Whoever fails to comply with 4[any order made by the National Company Law Tribunal] under 
sub-section (2) of section 36A, shall be punishable with imprisonment for a term which  may extend to 
three years and shall also be liable to a fine of not less than rupees fifty for every day during which such 
non-compliance continues;] 

(3) If any person 1[other than an auditor]— 

(a) receives any deposit in contravention of any direction given or order made under Chapter V; 

or  

1[(aa) fails to comply with any direction given or order made by  2[the National Housing Bank or 

the Reserve Bank] under any of the provisions of Chapter V; or] 

(b) issues any prospectus or advertisement otherwise than in accordance with section 35 or any 

order made under section 30, as the case may be; 

he shall be punishable with imprisonment for a term which may extend to three years and shall also be 
liable to fine which may extend,— 

(i) in the case of a contravention falling under clause (a), to twice the amount of the deposit 

received; and  

(ii) in the case of a contravention falling under clause (b), to twice the amount of the deposit 

called for by the prospectus or advertisement. 

1. Ins. by Act 15 of 2000, s. 24 (w.e.f. 12-6-2000). 
2. Ins. by s. 25, ibid. (w.e.f. 12-6-2000). 
3. Subs. by Act 23 of 2019, s. 170, for “the National Housing Bank” (w.e.f. 09-08-2019). 
4. Subs. by s. 170, ibid., for “any order made by the authorised officer” (w.e.f. 09-08-2019). 

31 

 
                                                           
(4) If any other provision of this Act is contravened or if any default is made in complying with any 
other requirement of this Act or of any order, regulation or direction made or given or condition imposed 
thereunder, any person guilty of such contravention or default shall be punishable with fine which may 
extend to two thousand rupees and where a contravention or default is a continuing one, with further fine 
which may extend to one hundred rupees for every day, after the first, during which the contravention or 
default continues. 

50. Offences by companies.—(1) Where an offence has been committed by a company, every person 
who, at the time the offence was committed, was in charge of, and was responsible to, the company for 
the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the 
offence and shall be liable to be proceeded against and punished accordingly: 

Provided  that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment provided in this Act, if he proves that the offence was committed without his knowledge or 
that he had exercised all due diligence to prevent the commission of such offence. 

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been 
committed  by  a  company  and  it  is  proved  that  the  offence  has  been  committed  with  the  consent  or 
connivance  of,  or  is attributable  to  any  neglect  on the  part  of  any  director,  manager,  secretary  or  other 
officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty 
of that offence and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section— 

(a) “company” means any body corporate and includes a firm or other association of individuals; 

and  

(b) “director”, in relation to a firm, means a partner in the firm.  

51.  Cognizance  of  offences.—(1)  No  court  shall  take  cognizance  of  any  offence  punishable  under 
this  Act except  upon  a complaint in  writing  made  by  an  officer  of  1[the  National  Housing  Bank  or  the 
Reserve Bank] generally or specially authorised in writing in this behalf by 1[the National Housing Bank 
or the Reserve Bank] and no court other than that of a Metropolitan Magistrate or a Judicial Magistrate of 
the first class or a court superior thereto shall try any such offence. 

(2)  Notwithstanding  anything  contained  in  the  Code  of  Criminal  Procedure,  1973  (2  of  1974),  a 
Magistrate may, if he sees reason so to do, dispense with the personal attendance of the officer of  1[the 
National  Housing  Bank  or  the  Reserve  Bank]  filing  the  complaint  but  the  Magistrate  may  in  his 
discretion, at any stage of the proceedings, direct the personal attendance of the complainant. 

2[52.  Application  of  fine.—A  court  imposing  any  fine  under  this  Act  may  direct  that  the  fine,  if 

realised shall be applied— 

(a) firstly in, or towards payment of, the cost of the proceedings, and 

(b) secondly for repayment of the deposit to the person to whom repayment of the deposit was to 
be made, and on such payment, the liability of the housing finance institution to make repayment of 
the deposit shall, to the extent of the amount paid by the Court, stand discharged. 
3[52A. Power of National Housing Bank and Reserve Bank to impose fine.—(1) Notwithstanding 
anything  contained  in  section  49,  if  the  contravention  or  default  of  the  nature  referred  to  in  the  said 
section is committed by a housing finance institution which is a company, the National Housing Bank or 
the Reserve Bank, as the case may be, may impose on such company— 

(a) a penalty not exceeding five thousand rupees; or 

(b)  where the  contravention  or  default  is  under sub-section (2A) or clause (a)  or  clause  (aa)  of  
sub-section (3) of that section, a penalty not exceeding five lakh rupees or twice the amount involved 
in  such  contravention  or  default,  where  the  amount  is  quantifiable,  whichever  is  more;  and  where 

1. Subs. by Act 23 of 2019, s. 171, for “the National Housing Bank,” (w.e.f. 09-08-2019). 
2. Subs. by Act 15 of 2000, s. 26, for section 52 (w.e.f. 12-6-2000). 
3. Subs. by Act 23 of 2019, s. 172, for section 52A (w.e.f. 09-08-2019). 

32 

 
                                                           
such contravention or  default is  a  continuing  one, further  penalty  which  may  extend to twenty-five 
thousand rupees for every day, after the first, during which the contravention or default continues. 

(2)  For  the  purpose  of  imposing  penalty  under  sub-section  (1),  the  National  Housing  Bank  or  the 
Reserve  Bank,  as  the  case  may  be,  shall  serve  a  notice  on  the  housing  finance  institution  which  is  a 
company requiring it to show cause why the amount specified in the notice should not be imposed as a 
penalty  and  a  reasonable  opportunity  of  being  heard  shall  also  be  given  to  such  housing  finance 
institution. 

(3)  Any  penalty  imposed  by  the  National  Housing  Bank  or  the  Reserve  Bank,  as  the  case  may  be, 
under this section shall be payable within a period of thirty days from the date on which notice issued by 
the National Housing Bank or the Reserve Bank, as the case may be, demanding payment of the sum is 
served on the housing finance institution which is a company and, in the event of failure of such housing 
finance institution to pay the sum within such period, may be levied on a direction made by the principal 
civil court having jurisdiction in the area where the registered office or the head office of such housing 
finance institution is situated: 

Provided  that  no  such  direction  shall  be  made,  except  on  an  application  made  by  an  officer  of  the 
National Housing Bank or the Reserve Bank, as the case may be, authorised in this behalf, to the principal 
civil court. 

(4) The court which makes a direction under sub-section (3), shall issue a certificate specifying the 
sum  payable  by  the  housing  finance  institution  which  is  a  company  and  every  such  certificate  shall  be 
enforceable in the same manner as if it were a decree made by the court in a civil suit. 

(5)  No  complaint  shall  be  filed  against  any  housing  finance  institution  which  is  a  company  in  any 
court of law pertaining to any contravention or default in respect of which any penalty has been imposed 
by the National Housing Bank or the Reserve Bank, as the case may be, under this section. 

(6) Where any complaint has been filed against a housing finance institution which is a company in a 
court  in  respect  of  contravention  or  default  of  the  nature  referred  to  in  section  49,  no  proceedings  for 
imposition of penalty against such housing finance institution shall be taken under this section.] 

53.  Bankers’  Books  Evidence  Act  18  of  1891,  to  apply  in  relation  to  the  National  Housing 
Bank.—The Bankers’ Books Evidence Act, 1891, shall apply in relation to the National Housing Bank as 
if it were a bank as defined in section 2 of that Act. 

54.  Liquidation  of  National  Housing  Bank.—No  provision  of  law  relating  to  the  winding  up  of 
companies shall apply to the National Housing Bank and the National Housing Bank shall not be placed 
in liquidation save by order of the Central Government and in such manner as it may direct. 

1[54A. Power to make rules.—(1) The Central Government may, by notification, make rules to carry 

out the provisions of this Act. 

(2) Without prejudice to the generality of the foregoing power, such rules may provide for all or any 

of the following matters, namely:— 

(a) qualifications for appointment as a recovery officer under sub-section (1) of section 36D; 
(b) the salaries and allowances and other terms and conditions of service of the officers and other 

employees of the Appellate Tribunal under sub-section (3) of section 36M; 

(c) the salaries and allowances and other terms and conditions of service of the Presiding Officers 

of the Appellate Tribunal under section 36N; and 

(d) the procedure for the investigation of misbehaviour or incapacity of the Presiding Officers of 

the Appellate Tribunals under sub-section (3) of section 36P.] 
55. Power of the Board to make regulations.—(1) The Board may, with the previous approval of 
2*** the Central Government, by notification, make regulations not inconsistent with this Act to provide 
for  all  matters  for  which  provision  is  necessary  or  expedient  for  the  purpose  of  giving  effect  to  the 
provisions of this Act. 

1. Ins. by Act 15 of 2000, s. 27 (w.e.f. 12-6-2000). 
2. The words “the Reserve Bank and in consultation with,” omitted by Act 13 of 2018, s. 177 (w.e.f. 1-6-2018). 

33 

 
                                                           
(2) In particular and without prejudice to the generality of the foregoing power, such regulations may 

provide for all or any of the following matters, namely:— 

(a)  the  fees  and  allowances  that  may  be  paid  to  the  directors  for  attending  the  meetings  of  the 

Board or its committees under sub-section (5) of section 7; 

1[(aa)  the  manner  in  which  directors  shall  be  elected  under  clause  (ca)  of  sub-section  (1)  of 

section 6;] 

(b) the  times  and  places at  which  the  Board  may  meet, and the rules of procedure that  may  be 

followed in regard to the transaction of business under sub-section (1) of section 11; 

(c) the number of members that the Executive Committee may consist, the functions that it may 
discharge and times and places at which it shall meet and the rules of procedure that it may follow in 
the transaction of business under section 12; 

(d) the manner and terms of issue and redemption of bonds and debentures under clause (a) of 

sub-section (1) of section 15; 

(e)  the  manner  in  which  and  the  conditions  subject  to  which  the  National  Housing  Bank  may 

borrow in foreign currency under sub-section (1) of section 16; 

(f) the form in which the statements, information, etc., is to be furnished under section 32; 
2[(fa) the form of application to be made under section 36E and the documents to be annexed to 

such application; 

(fb)  the  form  in  which  notice  of  demand  is  required  to  be  served  on  the  borrower  under  sub-

section (1) of section 36F; 

(fc) the manner in which the property shall be transferred under sub-section (2) of section 36G; 

(fd) the form in which the appeal can be filed with the Appellate Tribunal under section 36S and 

the amount of fee required to be deposited with such appeal;] 

(g) the special fund, reserve fund and other funds to be created under sub-section (2) of section 

37; 

(h)  the  form  and  manner  in  which  the  balance-sheet  and  accounts  shall  be  prepared  and 

maintained under sub-section (1) of section 38; 

(i) the duties and conduct, salaries, allowances and conditions of service of the officers and other 

members of staff of the National Housing Bank under section 43; 

(j)  the  establishment  and  maintenance  of  provident  fund  and  any  other  fund  for  the  benefit  of 

officers and other members of staff of the National Housing Bank under section 43; and 

2[(ja) the manner in which nomination may be made under sub-section (1) of section 47A;] 

(k) any other matter which is to be, or may be, prescribed. 

(3) Any regulation which may be made by the Board under this Act may be made 3*** in consultation 
with  the  Central  Government,  before  the  expiry  of  three  months  from  the  date  of  establishment  of  the 
National  Housing  Bank,  and  any  regulation  so  made  may  be  altered and rescinded  by  the  Board  in the 
exercise of its powers under this Act. 

(4)  The  power  to  make  regulations  conferred  by  this  section  shall  include  the  power  to  give 
retrospective  effect  to  the  regulations  or  any  of  them  from  a  date  not  earlier  than  the  date  of 
commencement  of  this  Act,  but  no  retrospective  effect  shall  be  given  to  any  regulation  so  as  to 
prejudicially affect the interests of any person to whom such regulation may be applicable. 

1. Ins. by Act 15 of 2000, s. 28 (w.e.f. 12-6-2000). 
2. Ins. by s. 28, ibid. (w.e.f. 12-6-2000). 
3. The words “by the Reserve Bank” omitted by Act 13 of 2018, s. 177 (w.e.f. 1-6-2018). 

34 

 
                                                           
(5) The Central Government shall cause every  1[rules, regulation or scheme] made under this Act to 
be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a 
total period of thirty days which may be comprised in one session or in two or more successive sessions, 
and  if,  before  the  expiry  of  the  session  immediately  following  the  session  or  the  successive  sessions 
aforesaid,  both  Houses  agree  in  making  any  modification  in  the  2[rules,  regulation  or  scheme]  or  both 
Houses agree that the 2[rules, regulation or scheme] should not be made, the2[rules, regulation or scheme] 
shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, 
that any such modification or annulment shall be without prejudice to the validity of anything previously 
done under that 2[rules, regulation or scheme.] 

56. [Amendment of certain enactments.]—Rep. by Repealing and Amending Act 2001, (30 of 2001), s. 

2 and the First Schedule (w.e.f.3-9-2001). 

57. Power to remove difficulties.—If any difficulty arises in giving effect to the provisions of this 
Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the 
difficulty: 

Provided  that  no  such  order  shall  be  made  after  the  expiry  of  a  period  of  three  years  from  the 

commencement of this Act. 

1. Subs. by Act 15 of 2000, s. 28, for “regulation or scheme” (w.e.f. 12-6-2000). 

35 

 
 
 
                                                           
THE FIRST SCHEDULE 

[See section 44(2)] 

DECLARATION OF FIDELITY AND SECRECY 

I, ..........do hereby declare that I will faithfully, truly and to the best of my skill and ability execute 
and  perform  the  duties  required  of  me  as  director, member  of  the.....................  committee,  auditor, 
advisor, officer or other employee (as the case may be) of the National Housing Bank and which properly 
relate to the office or position held by me in or in relation to the said National Housing Bank. 

I further declare that I will not communicate or allow to be communicated to any person not legally 
entitled thereto any information relating to the affairs of the National Housing Bank nor will I allow any 
such person to inspect or have access to any books or documents belonging to or in the possession of the 
National Housing Bank and relating to the business of the said National Housing Bank or the business of 
any person having any dealing with the said National Housing Bank. 

Signed before me.     

(Signature) 

______ 

36 

 
 
 
 
 
 
 
 
 
 
 
 
[The Second Schedule.] —Rep. by the Repealing and Amending Act, 2001 (30 of 2001), s. 2 and the 

First Schedule (w.e.f. 3-9-2001). 

__________ 

37 

 
 
 
 
1[THE THIRD SCHEDULE 

(See section 16A) 

DECLARATION REFERRED TO IN SECTION16A OF THE NATIONAL HOUSING BANK ACT, 1987 

Place 

Date: 

I/we ______________________ hereby declare that in consideration of the assistance sanctioned 
by the National Housing Bank to me/us at my/our request, as specified in the Annexure hereto, I/we agree 
that the immovable property specified in the said Annexure shall constitute security for the said assistance 
and I/we further agree that the dues relating to the assistance mentioned above, shall, on and from the date 
of these presents, be a charge on the said immovable property. 

1. Signed and delivered by 

 ………………………….. 

         (Borrower) 

2. Signed and delivered by 

..................................... 

(Surety) 

I. Details of assistance. 

II. Particulars of immovable property.] 

ANNEXURE 

1. Added by Act 15 of 2000, s. 29 (w.e.f. 12-6-2000). 

38 

 
                                                           
