National Housing Bank (NHB)

Rural Housing Fund (RHF)

The National Urban Housing and Habitat Policy 2007 released by the Government of India in December 2007 commend a multi pronged strategy for achieving the national goal of ‘Affordable Housing to All’. In particular, rural housing is an underserved segment with about only 10% of the housing finance from banks flowing to rural housing. The Golden Jubilee Rural Housing Refinance Scheme introduced by National Housing Bank in 1997 has been successful to some extent and needs to be supplemented. An announcement was made in the Union Budget, 2011-12, to provide an amount of Rs. 3000 crores for rural housing. The Hon’ble Union Minister for Finance stated that “Financial inclusion can be taken forward by expanding the reach of NABARD, SIDBI and NHB. Hence, in order to increase the resource base of these three banks, I propose to tap into the resources of scheduled commercial banks to the extent that they fall short of their obligation to lend to the priority sector. Accordingly, it is proposed to create the following funds: a fund of Rs.1200 crore in NHB to enhance its refinance operations in the rural housing sector.” In year 2011-12 the disbursement made from 01.07.12 to 07.06.12 under the scheme was Rs 2732.41 crore.

The interest rate charged to the PLIs will remain fixed during the entire tenure of the refinance assistance. Currently, refinance is being extended at a concessional rate of 6%-7 %( varying according to the loan size), fixed for a period of seven years.


NHB introduced a new refinance scheme for construction finance for affordable housing. NHB under the scheme is extending support to the housing activities with special focus on Tier II and Tier III cities through various intermediaries by way of refinance. Slum redevelopment in metros is also being covered under the scheme in addition to industrial worker housing, working women hostels and old age homes, housing projects financed under the JNNURM or any other similar Central Government/State Government scheme such as natural disaster affected housing. The Scheme incorporates certain key restrictions on unit cost, unit area, land price etc., to ensure that refinance is not used for higher income housing.


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