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NHB (National Housing Bank) refinance
What it is
National Housing Bank, a wholly RBI-owned institution, provides refinance to housing finance companies and banks against their housing loan portfolios, at rates below market borrowing and with tenors matched to housing assets
Allocations are directed - concessional windows favour affordable housing, rural housing and lending to weaker sections, so eligibility shapes the lender's book
Impact on industries
- Solves the core asset-liability problem of housing finance: long-dated loans funded with long-dated refinance instead of short-term borrowings that create rollover risk
- Lowers cost of funds for smaller HFCs that cannot access bond markets at fine rates, which is what lets them compete with banks
- Allocation is administrative and finite, so a lender cannot plan growth around it - the quantum available in a given year is not within the company's control
- Concessional pricing is tied to end-use, so refinance access nudges portfolio mix toward affordable and rural segments