 errata to the national housing bank (amendment) bill, 2000 (to be/as introduced in rajya sabha)page 2 ~ 6) line 12, add "the" before reserve bank (ii) line 33, for "offinancial" read "of financial" page 3, line 11, delete "the" before "securities" page 12, line 37, for "provision" read "provisions" page 13, line 16, for "notificatio" read "notification" page 17 - (i) line 3, for "agains" read "against" (ii) line 15, insert in the margin "5 of 1908" against the proviso to clause 36t ° pge 18, line 36, for "any" read "any" page 19, line 32; marginal heading should be read as "application" instead of "aplication" page 29, line 6, from below for "empower" read "empowers" page 28, line 20, add "twelve" before "months" 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 townshipcum-housing development or slum clearance projects;"; (ii) after clause (e), the following clauses shall be inserted, namely:-— "(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 the secirities therefor to such trusts for a 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 certficates of beneficial interest or other insturments, by whatever name called, and to act as trustee for the hold-' ers of such securities; (ed) setting up of onc or more mutual funds for undertaking housing finance activities; (ee) undertaking or participating in housing mortgage insurance;"; (iii) for clause (f), the following clause shall be substituted, namely:— "(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;" 8 in section 15 of the principal act, in sub-section (/),— amendment of section 15 (a) in clause (b), for the words "the central government", the words "the central government, scheduled banks, financial institutions, mutual funds" shall be substituted; (b) in clause (c), for the words "a period which shall not be less than twelve months from the date of the making of the deposit", the words "such period and" shall be substituted; (c) in clause (d), for sub-clause (i), the following sub-clause shall be substituted, namely:— ' "(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;" 9 after section 16 of the principal act, the following sections shall be inserted, namely:— "16a (1) where any person or institution seeks any financial assistance from assistance to the borrower when to operate 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 or a charge in the property offered as institution or, as the case may be, such other person may execute a written declarasecuritytion 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 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 (/), 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 (/) 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 16 of 1908 (4) every declaration made under sub-section (/) or sub-section (2), shall be deemed to be a document registrable as an agreement under the provisions of the registration act, 1908 and no such declaration shall have effect unless it is so registered amount and 16b (1) any sums received by a borrowing institution in repayment or realisasecurity to be tion of loans and advances financed or refinanced either wholly or partly by the held in trust 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" amendment of 10 in section 18 of the principal act, for the words "housing finance institution", the section 18 word "institution" shall be substituted insertion of 11 after section 18 of the principal act, the following sections shall be inserted, new sections namely:— 18a and 18b  exemption "18a notwithstanding anything contained in sub-section (/) of section 17 of 16 of 1908from registrathe registration act, 1908,— tion (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 securitise 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 recovery of 18b where any amount is due under an agreement to the national housifig dues as arrears bank, whether acting as a trustee or otherwise, in respect of securitisation of loans of of land revenue 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" 12 in sections 19 to 25 of the principal act, for the words "housing finance institu- amendment of tions", wherever they occur, the word "institutions" shall be substituted sues 19 to 13 after section 29 of the principal act, the following sections shall be inserted, insertion of new namely :— sections 29a to 29c "29a (1) notwithstanding anything contained in this chapter or in any other requirement of law for the time being in force, no housing finance institution which is a company gtstration and shall commence or carry on the business of a housing finance institution without— "et owned fund (a) obtaining a certificate of registration issued under this chapter; and (b) having the net owned fund of twenty five lakh rupees or such other higher amount, as the national housing bank may, by notification, specify (2) every such housing finance institution shall make an application for registration to the national housing bank in such form as may be specified by the national housing bank: provided that a housing finance institution which is a company in existence on the commencement of the national housing bank (amendment) act, 2000, shall make an application for registration'to the national housing bank before the expiry of six months from such commencement and notwithstanding anything contained in sub-section (/), may continue to carry on the business of housing finance institution until a certificate of registration is issued to it or rejection of application for registration is communicated to it (3) notwithstanding anything contained in sub-section (/), a housing finance institution which is a company in existence on the commencement of the national housing bank (amendment) act, 2000, and having a net owned fund of less than twenty five lakh rupees, may, for the purpose of enabling such institution to fulfil the requirement of the net owned fund, continue to carry on the busiress of a housing finance institution— (i) for a period of three years from such commencement; or (ii) for such further period as the national housing bank may, after recording the reasons in writing for so doing, extend, subject to the conditions that such institution shall, within three months of fulfilling the requirement of the net owned fund, inform the national housing bank about such fulfilment: provided that the period allowed to continue business under this sub-section shall in no case exceed six years in the aggregate (4) the national housing 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 national housing 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 (5) the national housing 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 national housing 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 (tii) 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 national housing bank under the provisions of this chapter; or (6) to maintain accounts in accordance with the requirement of any law or any direction or order issued by the national housing bank under the provisions of this chapier; 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 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 housing finance institution has failed to comply with the provisions of clause (ti) or has failed to fulfil any of the conditions referred to in clauses (a) to (g) of subsection (4) the national housing bank, uniess 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 housing finance institution, shall give an opportunity to such institution on such terms as the national housing 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 apppeal has been preferred to it, or of the national housing 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, - (1) "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 thereform— (i) accumulated balance of loss; (ii) deferred revenue expenditure; and (iii) other intangible assets; and (6) further reduced by the amounts representing— (1) investments of such instituion in shares of - (i) its subsidiaries; (ii) compaines in the same group: (iii) all other housing finance institutions which are 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 (ii) companies in the same group, to the extent such amount exceeds ten per cent of (a) above; 1 of 1956 (ii) "subsidiaries" and "companies in the same group" shall have the same meanings assigned to them inthe companies act, 1956 29b (1) every housing finance institution shall invest and continue to invest in india in unencumbered approved securities, valued at a price noi exceeding the cur- | maintenance    | of    ||----------------|-------|| percentage     | of    || assets        |       |rent 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 national housing 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 an 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 (/) shall not be less than ten per cent or such higher percentage not exceeding twenty-five per cent, as the national housing bank may, from time to time and by notification specify, of the deposits @tstanding 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 national housing 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 national housing 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 (/) 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 eagh 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 4 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 natioaal 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 ina 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 (/) or sub-section (2), it may not demand the payment of the penal interest explanation— for the purposes of this section,— (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 reserve fund 29c (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 spe- 43 of 1961cial reserve in terms of clause (viii) of sub-section (/) of section 36 of the income-tax act, 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 (7), shall be made by such housing finance institution except for the purpose as may be specified by the national housing bank from time to time and every such appropriation shall be reported to the national housing bank within twentyone days from the date of such withdrawal: provided that the national heusing bank may, in any particular case ahd 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 (/), the central government may, on the recommendation of the national housing 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 (/) 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 inthe reserve fund under sub-section (/), together with the amount in the share premium account, is not less than the paid-up capital of the housing finance institution" 14, after section 30 of the principal act, the following section shall be inserted, _ insertion of new namely:— section 30a "30a (2) if the national housing bank is satisfied that, in the public interest or power of the to regulate the housing finance system of the country to its advantage or to prevent the national affairs of any housing finance institution being conducted in a manner detrimental to pogsing bank the interest of the depositors or in a manner prejudicial to the interest of the housing policy and finance institutions, it is necessary or expedient so to do, it may subject to the proviissue sions of sub-section (5) of section 5, determine the policy and give directions to all or _ directions any of the housing finance institution relating to income recognition, accounting standards, making of proper provision for bad and doubtful debts, capital adequacy based on risk weights for assets and credit conversion factors for offbalance-sheet items and also relating to deployment of funds by a housing finance institution or a group of housing finance institutions or housing finance institutions 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 (j), the national housing bank may give directions to housing finance institutions generally or to a group of housing finance institutions or to any housing finance institution 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" 15 in section 31 of the principal act, in sub-section (3), after the word "including", amendment of the words "credit rating of the housing finance institution accepting deposits" shall be insection 31 serted 16 in section 33 of the principal act,— amendment of section 33 (a) after sub-section (/), the following sub-section shall be inserted, namely:— "(1a) the national housing 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"; (b) after sub-section (2), the following sub-section shall be inserted, namely:— "(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, it may at any time by order, direct that a special audjt 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" insertion of new 17 after section 33 of the principal act, the following sections shall be inserted, sections 33a namely:— and 33b power of "33a (/) if any housing finance institution violates the provisions of any sec- , national tion or fails to comply with any direction or order given by the national housing bank housing bank under any of the provisions of this chapter, the national housing bank may prohibit acceptance of the housing finance institution from accepting any deposit deposit and alienation of (2) notwithstanding anything to the contrary contained in any agreement or assets instrument or any law for the time being in force, the national housing 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 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 (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 up petition (b) has by virtue of the provisions of section 29a become disqualified to carry on the business of a housing finance institution; or (c) has been prohibited by the national housing 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, 1 of 1956may file an application for winding up of such housing finance institution under the companies act, 1956 (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 subsection (j) shall be sent to the registrar of companies 1 of 1956 (4) all the provisions of the companies act, 1956 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" 18 after section 35 of the principal act, the following sections shall be inserted, namely:— insertion of new sections 35a and 35b "35a (1) any information relating to a housing finance institution, - disclosure of information (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 the national housing bank, 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 housing finance institution, with the previous permission of the national housing bank, of any information furnished to the national housing bank under sub-section (/); (b) the publication by the national housing bank, if it considers necessary in the public interest so to do, of any information collected by it under subsection (j) in such consolidated form as it may think fit without disclosing the name of any housing finance institution or its borrowers; (c} the disclosure by the housing finance institution or by the national housing bank of any such information to any other housing finance institution 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 housing finance institution 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, the national housing bank, if it is satisfied that, in the public interest or in the interest of the depositors or the housing finance institution or to prevent the affairs of any housing finance institution 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 housing finance institution 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 the national housing bank to produce or to give inspection of any statement or other material obtained by the national housing bank under any provision of this chapter 35b the national housing bank on being satisfied that it is necessary so to do, may, declare by notification that any or all the provisions of this chapter shall not apply to a housing finance institution or a group of 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" 19 after section 36 of the principal act, the following sections shall be inserted, namely:— insertion of new sections 36a and 36b "36a (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 power to order repayment of deposit 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 nomination by depositors 10 of 1949, 36b (j) 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 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 right 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 cen- 10 of 1949 tral government under section 45za of the banking regulation act, 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, any person to receive 10 of 1949 the amount of deposit in the event of his death during the minority of the nominee 10 of 1949(4) payment by a housing finance institution in accordance with the provision 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 againstthe person to whom any payment is made under this section (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" 20 after chapter v of the principal act, the following chapter shall be inserted, namely:— insertion of new chapter va  'chapter va other provisions relating to housing finance institutions36c in this chapter, unless the context otherwise requires,— definitions (a) 'appellate tribunal" means the appellate tribunal established under section 36-i; (5) "approved institution" means— (i) ahousing finance institution which has been granted a certificate of registration under sub-section (5) of section 29a; (ii) 'a scheduled bank; (ii) 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 apppinted under section 36d appointment of recovery 36d (/) the central government may, in consultation with the national housing bank, by notification appoint such persons being the officers of the approved officer 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 | application    | to       ||----------------|----------|| the            | recovery || officer       |          |36e (7) 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, 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 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 (/) 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 (/) 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 (7) on receipt of an application under section 36e, if the revovery 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 procedure in respect of application under section 36e or has otherwise failed to comply wjth 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 (1) where the borrower refuses or fails to comply with the order within enforcement of order of recovery the time specified therein the recovery officer may, take possession of any property pledged, mortgaged, hypothecated or assigned to the approved institution as security officer 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 (/), 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 (j), 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 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 (/) where any property is sold or leased in pursuance of any power con- chief metropolitan magisferred 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 trate and district magistrate to assist recovery officer in taking charge of property 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 (j), 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 establishment of appellate tribunal 36-i (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 (/), the areas in relation to which the appellate tribunal may exercise jurisdiction (3) notwithstanding anything contained in sub-sections (/) 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 composition of appellate tribunal 36j 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 a person shall not be qualified for appointment as the presiding officer of an appellate tribunal, unless he-— qualifications for appointment as presiding officer (a) is, or has been, or is qualified to be a district judge; | of        ||-----------|| tribunal |(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 term of office 36l 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 (1) the central government shall provide the appellate tribunal with such officers and other employees as that government may think fit' | staff     ||-----------|| appellate || tribunal |(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 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: salaries and allowances and other terms and conditions of service of presiding officers 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 filling up of 360 if, for any reason other than temporary absence, any vacancy occurs in vacancies 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 (1) the presiding officer of an appellate tribunal may, by notice in writ- resignation and removal ing under his hand addressed to the centrtal 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 no order of the central government appointing any person as the presid- orders constituting appeling officer of an appellate tribunal shall be called in question in any manner, and no jate tribunal to be final and not 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 to invalidate its proceedings 36r 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 jurisdiction, powers and authority of appellate tribunal 36s (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 tri- appeal to the appellate tribunal bunal having jurisdiction in the matter (2) every appeal under sub-section (1) shall be filed within a period of fortyfive 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 (/), 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 againsi (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-seciton (/) 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 |        | deposit    | of    ||--------|------------|-------|| amount | due,       | on    || filing | appeal    |       |36t 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 (/) the recovery officer and the appellate tribunal shall not be bound by the procedure laid down by the code of civil procedure, 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 | procedure    | and    ||--------------|--------|| powers       | of     || recovery     |        || officer      | and    || appellate    |        || tribunal    |        |(2) the recovery officer and the appellate tribunal shall have, for the purposes 5 of 1908 of discharging their functions under this act, the same powers as are vested in a civil court under the code of civil procedure, 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, and the recovery officer 45 of 1860 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 limitation 36v the provisions of the limitation act, 1963 shall, as far as may be, apply to 36 of 1963 an applicaiton made to recovery officer presiding offi- 36w 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 cer, recovery officer, other officers and employees to be public servant| protection    | of              ||---------------|-----------------|| 36x          |                 || no            |                 || suit,         |                 || prosecution   |                 || or            |                 || other         |                 || legal         |                 || proceedings   |                 || shall         |                 || lie           |                 || against       |                 || the           |                 || central       |                 || government    |                 || or            |                 || against       |                 || the           |                 || presiding     |                 || officer       |                 || of            |                 || an            |                 || appellate     |                 || tribunal      |                 || or            |                 || against       |                 || action        | taken           || good          | faith           || 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          |                 || there-        |                 || under,        |                 || bar           | of              || junsdiction   |                 || 36y          |                 || no            |                 || court         |                 || or            |                 || other         |                 || authority     |                 || shall         |                 || have,         |                 || or            |                 || be            |                 || entitled      |                 || to            |                 || exercise,     |                 || any           |                 || juris-        |                 || diction,      |                 || 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      |                 || transitional  |                 || 36z          | notwithstanding || provisions    |                 || the           | appellate       || lished        | under           |531 of 1993 tions act, 1993 and which is functioning in that area shall exercise the jurisdiction, powers and authority conferred on the appellate tribunal under this act' amendment of 21 in section 40 of the principal act, in sub-section (5), for the words "three months", section 40 the words ""four months", shall be substituted 22 after section 43 of the principal act, the following section shall be inserted, namely:— insertion of new section 43a delegation of powers "43a 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" 23 after section 45 of the principal act, the following section shall be inserted, namely:— insertion of new section 45a "45a (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 shali arrangement with national housing bank on appoint ment of directors to prevail be valid and effective notwithstanding anything to the contrary contained in the companies act, 1956 or in any other law for the time being in force or in the memorandum, 1 of 1956articles of association or any other instrument relating to that housing finance instituon, or any provision regarding share qualificaiton, age limit, number of directorships, 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 shali not be taken into account for computing the number of directors liable to such retirement " insertion of 2a after section 47 of the prinaipal act, the following section shall be inserted, new section namely:— 47a, nomination in "respect of "47a (1) notwithstanding anything contained in any other law for the time being in force, where a nomination in respect of any deposit, bonds or other securities deposits, bonds etc 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 (/) shall be a full discharge of its liability in respect of such deposits, bonds or securities" 25 in section 49 of the principal act— amendment of section 49, (a) after sub-section (2), the following sub-sections shall be inserted, namely:— "(2a) if any person contravenes the provisions of sub-section (/) 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 the national housing bank under section 33, he shall be punishable with fine which may extend to five thousand rupees (2c) whoever fails to comply with any order made by the authorised officer 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; (b) in sub-section (3),—- (i) after the words "if any person", the words "other than an auditor" shall be inserted; (ii) after clause (a), the following clause shall be inserted, namely: - "(aa) fails to comply with any direction given or order made by the national housing bank under any of the provisions of chapter v; or" 26 for section 52 of the principal act, the following sections shall be substituted, substitution of new sections namely:— for section 52 aplication of "52 a court imposing fine under the act may direct that the fine, if realised fine shall be applied— (a) firstly in, of 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 52a (1) notwithstanding anything contained in section 49, if the contravention or default of the nature referred to in section 49 is committed by a housing finance | power    | of    ||----------|-------|| national |       || housing  | bank  |institution which is a company, the national housing bank may impose on such insti- to impose finetution— (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 section 49, 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 such contravention or default is a continuning 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 (/), the national - housing bank shall serve a notice on the housing finance institution 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 under this section shall be payable within a period of thirty days from the date on which notice issued by the national housing bank demanding payment of the sum is served on the housing finance institution and, in the event of failure of the 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 the 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 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 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 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 under this section (6) where any complaint has been filed against a housing finance institution in a court in respect of contravention or default of the nature referred to in section 49, no proceedings for imposition of penalty against the housing finance institution shall be taken under this section" 27 after section 54 of the principal act, the following section shall be inserted, namely:-— insertion of new section 54a "54a (1) the central government may, by notification, make rules to carry out power to make rules 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 (j) 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" 28 in section 55 of the principal act,— amendment of section 55 (a) in sub-section (2),— (i) after clause (a), the following clause shall be inserted, namely: - "(aa) the manner in which directors shall be elected under clause (ca) of sub-section (/) of section 6;";(ii) after clause (f), the following clauses shall be inserted, namely:— "(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 (/) 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;";  (iii) after clause (j), the following clause shall be inserted, namely: - "(ga) the manner in which nomination may be made under subsection (7) of section 47a"; (b) in sub-section (5), for the words "regulation or scheme", wherever they occur, the words "rules, regulation or scheme" shall be substituted addition of new schedule29 after the second schedule to the principal act, the following schedule shall be added at the end, namely:—  "the third schedule(see section 16a) declaration referred to in section 16a of the national housinc bank act, 1987 place date: 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 coane weer nee renersere reer nee rensenee® (borrower) 2 signed and delivered by poe vee een eee neeeereener nee uer ees enee (surety)  annexurei details of assistance ii particulars of immovable property"'  statement of objects and reasonsthe national housing bank was established in july, 1988 under the national housing bank act, 1987 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 to meet the objectives aforesaid, the national housing bank was also conferred powers to regulate the deposit acceptance activities of the housing finance institutions similar to those available to reserve bank of india in respect of non-banking financial companies the powers of the reserve bank of india to control the activities of non-banking financial companies were further strengthened by the reserve bank of india (amendment) act, 1997 the housing finance companies which are sub-set of non-banking financial companies were exempted from the provisions of the reserve bank of india act, as amended in 1997, for the reason that such companies fall under the regulatory frame work of the national housing bank thus there arose the necessity to confer powers on the national housing bank similar to those available to the reserve bank of india after the above amendment these proposed provisions will enable the national housing bank to safeguard the interest of depositors and promote healthy and universal growth of housing finance companies in the country 2 housing loans are generally of long term duration and consequently the funds of housing finance institutions get locked up in mortgages there is a need to augment their capacity to provide more finance by adopting asset securitisation and development of a secondary mortgage market in the country the national housing bank, being the principal agency in the field of housing finance, is being entrusted with the responsibility to develop such market in housing mortgages in the country 3 there has been a long standing demand from the housing finance institutions for a speedier method of recovery of dues from the defaulting borrowers it is proposed to provide for a simple, speedy and cost effective method of recovery of overdues by the housing finance institutions by providing for the sale of property charged as security for the assistance granted by such institutions through recovery officers a provision is also being made for establishment of appellate tribunal to hear appeal against the decision of recovery officer 4 with the introduction of economic reforms, it has been considered necessary to enlarge the capital and shareholders' base of the national housing bank consequently, it is proposed to provide for enhancement of the authorised capital of the national housing bank to rupees three hundred fifty crores with an enabling provision for further increase up to rupees two thousand crores it is also proposed that the national housing bank may offer its shareholding to institutions, besides the reserve bank of india, in such manner that the reserve bank of india, the central government, public sector banks, public financial institutions or other institutions owned or controlled by the central government, shall in aggregate at any time hold not less that fifty-one per cent of the issued capital of the national housing bank it is also proposed to provide for restructuring of the board of director of the national housing bank 5 in the light of the experience gained in the operations of the national housing bank since its establishment, it is felt necessary to bring certain amendments to the said act for the smooth working of the national housing bank and to authorise it to undertake certain additional business of financing of agricultural and rural development banks, making of loans and advances for residential township-cum-housing development projects, undertaking securitisation of loans, setting up of mutual fund and undertaking or participating in housing mortgage insurance business 6 the bill seeks to achieve the aforesaid object new delhi; yashwant sinha the 10th march, 2000  notes on clausesclause 2 seeks to amend the definition of the "housing finance institution" so as to bring more such institutions within the ambit of the housing finance institutions clause 3 seeks to substitute section 4 of the principal act with a view to provide for enhancement of the authorised capital of the national housing bank and to enlarge the shareholders base clause 4 provides for amendment of section 5 of the principal act so as to specify the powers of the chairman when he is appointed as a whole time director clause 5 seeks to amend section 6 of the principal act with a view to provide for election of two directors from the shareholders and restructuring of the board of directors clause 7 provides for amendment of section 14 of the principal act so as to enable the national housing bank to undertake certain additional business by way of financing the agricultural and rural development banks, make loans and advances for projects of residential township, to undertake securitisation of housing loans, to set-up mutual funds and to undertake or participate in the housing mortgage insurance business clause 8 seeks to amend section 15 of the principal act with a view to provide flexibility in the matters of borrowing and acceptance of deposits by the national housing bank clause 9 seeks to insert new sections 16a and 16b which provides for creation of charge by an institution or a person borrowing from the national housing bank by executing a written declaration and hold amounts and securities in trust in certain cases clause 10 seeks to amend section 18 of the principal act with a view to empower the national housing bank to acquire rights in relation to all the institutions involved in housing finance clause 11 seeks to insert new sections 18a and 18b which lays down that the instruments issued by the national housing bank in a transaction of securitisation to the investors and subsequent transfers by such investors shall not require compulsory registration and the amounts due shall be recoverable as the arrears of land revenue clasue 12 seeks to amend sections 19 to 25 of the principal act with a view to empower the nationa] housing bank to have certain rights not only in relation to housing finance institutions but also in relation to all institutions involved in housing finance clause 13 seeks to insert new sections 29a, 29b and 29c with a view to provide for registration of housing finance company with the national housing bank for commencement or carrying on of such business by that company, to provide for requirement of investment of certain percentage of assets by a housing finance institution in unencumbered approved securities and in term deposits to afford protection to the depositors, and to provide for creation of reserve fund by a housing finance institution out of its net profits clause 14 seeks to insert new section 30a with a view to confer on the national housing bank the power to determine the policy and issue directions to housing finance institutions clause 15 seeks to amend section 31 of the principal act with a view to enable the national housing bank to give directions requiring housing finance institutions to have credit ratings for accepting deposits clause 16 seeks to amend section 33 of the principal act with a view to empower the national housing bank to issue directions in public interest to housing finance institutions or to their auditors to order special audit of the housing finance institutions clause 17 seeks to insert new sections 33a and 33b with a view to empowre the nationafhousing bank to prohibit acceptance of deposit and alienation of assets by housing finance institutions and to file winding up petition against housing finance institution under certain circumstances clause 18 seeks to insert new sections 35a and 35b with a view to provide for disclosure of information obtained by the national housing bank from a housing finance institution and to empower the national housing bank to exempt any housing finance institution clause 19 seeks to insert new sections 36a and 36b with a view to empower an officer of the national housing bank to order repayment of deposits by a housing finance institution and to provide for the facility of nomination to depositors of a housing finance institution clause 20 seeks to provide for insertion of a new chapter va in the principal act so as to provide for appointment of recovery officer, establishment of appellate tribunal, appointment of officers and other employees and to provide for a mechanism for the recovery of dues of housing finance institution from the defaulters clause 21 seeks to amend section 40 of the principal act to enhance the period of submission of annual accounts to the central government clause 22 seeks to insert new section 43a so as to provide for delegation of powers by the board of the national housing bank to the officers of the bank clause 23 seeks to insert new section 45a with a view to provide that the arrangement entered into by the housing finance institutions with the national housing bank for appointment of directors shall prevail and such appointment shall be valid and effective clause 24 seeks to insert new section 47a which provide for the facility of nomination to the depositors, holders of bonds or other securities of the national housing bank clause 25 seeks to amend section 49 of the principal act with a view to enhance the penalties for contravention of the provisions of the act clause 26 seeks to substitute section 52 with a view to provide for the application of fine imposed under the act and insert new section 52a which empower the national housing bank for imposing fine on contravention or default by housing finance institution clause 27 seeks to insert new section 54a which empower the central government to make rules under the act clause 28 seeks to amend section 55 of the principal act so as to empower the board to make regulations clause 29 seeks to add a new schedule to the principal act which prescribe the form of declaration regarding creation of charge financial memorandumclause 20 of the bill proposes to insert a new section 36-m which lays down that the central government may provide the appellate tribunal with such officers and other employees as that government may think fit sub-section (3) of said section provides that the officers and other employees of the appellate tribunals shall be paid such salaries and allowances as may be specified by the central government 2 said clause also proposes to insert a new section 36-n which provides that the presiding officers of the appellate tribunal shall be paid such salaries and allowances as may be specified by the central government 3 itis estimated that on account of the salary and allowances of the presiding officer, officers and other employees of an appellate tribunal and other miscellaneous expenses there will be per annum a recurring expenditure of rupees forty lakh and non-recurring expenditure of rupees forty-five lakh from the consolidated fund of india 4 the bill does not involve any other recurring or non-recurring expenditure  memorandum regarding delegated legislationclause 3 of the bill seeks to substitute a new section for section 4 of the principal act the proposed new section fix the limit of the authorised and paid up capital of the national housing bank to rupees three hundred and fifty crores but the central government have been empowered to increase the authorised capital of the national housing bank by notification up to rupees two thousand crores  caluse 7 seeks to amend section 14 of the principal act thereby empowering the central government to specify by notification other institutions to whom the national housing bank may make loans and advances caluse 13 of the bill seeks to insert a new section 29a which provide for compulsory registration of housing finance companies having net owned fund of rupees twenty-five lakh the national housing bank is being empowered to increase from time to time by notification this limit of net owned fund for registration purposes, a new section 29b is also proposed to be inserted by the said clause the provisions of this section require a housing finance company to maintain certain percentage of its assets in unencumbered securities and specified term deposits the national housing bank is being empowered to increase by notification the limit of such investment clause 18 of the bill seeks to insert a new section 35b which empowers the national housing bank to exempt by notification any housing finance institution from the provisions of chapter v of the principal act clause 20 of the bill seeks to insert a new chapter va which provides for simple machanism for the recovery of dues clause (b) of proposed new section 36c defines 'approved institutions' and also empowers the central government to specify by notification other institutions as approved institutions clause 27 of the bill seeks to insert a new section 54a which empowers the central government to make rules to carry out the provisions of the principal act these rules may provide for qualifications for appointment of recovery officers under sub-section (1) of section 36d, 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, the salaries and allowances and other terms and conditions of service of the presiding officers of the appellate tribunals under section 36n and the procedure for investigation of misbehaviour or incapacity of the presiding officers of the appellate tribunals under subsection (3) of section 36p clause 28 of the bill seeks to amend section 55 of the principal act so as to empower the board to make regulations which inter alia may provide for the manner of election of directors under clause (ca) of sub-section (1) of section 6, the form of application to be made to the recovery officer under section 36e and the documents to be annexed with such application, the form of notice of demand under sub-section (1) of section 36f, the manner of transfer of property under sub-section (2) of section 36g, the form of appeal to be filed under section 36s and the amount of fees to be deposited at the time of making appeal and the manner of making nomination under sub-section (1) of section 47a these matters of detail are essential for effective administration of the provisions of the bill it is difficult to provide for all the situations in the bill itself and the delegation of these legislative powers is, therefore, of a normal character  annexure extracts from the national housine bank act, 1987 (53 of 1987)2 in this act, unless the context otherwise requires,— definitions   (d) "housing finance institution" includes every institution, whether incorporated or not, which primarily transacts or has as its principal object, the transacting of the business of providing finance for housing, whether directly or indirectly; 4, the authorised and paid up capital of the national housing bank shall be one hundred crores of rupees and shali be subscribed by the reserve bank: provided that the central government may, in consultation with the reserve bank by notification, increase the said capital up to five hundred crores of rupees and the capital so increased shall also be subscribed by the reserve bank  chapter iii management of the national housinc bankmanagement (3) subject to the provisions of sub-section (/) and save as otherwise provided in the regulations made under this act,— (a) the chairman, if he is holding offices both as the chairman and the managing director, or (b) the managing director, if the chairman 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 6 (1) the board of directors of the national housing bank shall consist of the following, namely:— (b) three 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; (c) three directors, who shall be persons with experience in the working of institutions involved in providing funds for housing or engaged in housing development;      (2) the chairman, the managing director and other directors excluding the directors referred to in clause (d), shall be appointed by the central government in consultation with the reserve bank and directors referred to in clause (d) shall be nominated by the reserve bank 7 ( 1 }      term of office of chairman, managing director and other directors, service conditions, etc(2) the directors referred to in clauses (b) and (c) of sub-section (1) of section 6 shall hold office for a term of three years: provided that any such director shall, notwithstanding the expiration of his term, continue to hold office until his successor enters upon his office       chapter iv business of the national housinc bankbusiness of 14, subject to the provisions of this act, the national housing bank may transact all or any of the fotlowing kinds of business, namely:—— the national housing bank      (b) making of loans and advances or rendering any other form of financial assistance whatsoever to housing finance institutions and scheduled banks or to any authority established by or under any central, state or provincial act and engaged in slum clearance;     % (f} forming, promoting and managing subsidiaries for carrying out all or any of its functions under this act;      borrowings 15 (1) the national housing bank may, for the purpose of carrying out its functions under this act— % %    and acceptance of deposits by national housing bank (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 a period which shall not be less than elve months from the date of the making of the deposit on such terms as may generally or specially be approved by the reserve bank: providing 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-— (i) repayable on demand or on the expiry of fixed periods not exceeding eighteen months from the date of the making of loan or advance, on such terms and conditions including the terms relating to security and purpose as may be specified by the reserve bank;      power to acquire rights 18 the national housing bank shall have the right to acquire, by transfer or assignment, the rights and interests of any housing finance 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 interets in relation to such loan or advance may be lawfully transferred 19 in entering into any transaction under this chapter with any borrowing housing finance institution, the national housing bank may impose such conditions as it may think necessary or expedient for protecting the interests of the national housing bankpower to impose conditions for accommodation power to call 20 notwithstanding anything to the contrary contained in any agreement, the national housing bank may, by notice in writing, require any borrowing housing finance institution to discharge forthwith in full its liabilities to the national housing bank~ | for     | repayment    ||---------|--------------|| before  | agreed       || period, |              |(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 housing finance 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 housing finance 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 national housing bank to have access to records 21 (1) the national houssing bank shali have free access to all such records of any housing finance 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 housing finance 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 housing finance institution or the refinancing of any loan or advance made to such person by that housing finance instituton (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 | validity    | of    ||-------------|-------|| loan        | or    || advance     | not   |22 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 be questioned of non-compliance with the requirements of such other law or of any resolution, contract, or any instrument regulating the constitution of the borrowing housing finance 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 the national housing bank shall not make any loan or advance on the security of national housits own bonds or debentures ing bank not to make to loans |           | or    | advances    ||-----------|-------|-------------|| against   | its   | own         || bonds     | or    | de-         || bentures |       |             || power     | to    |             || inspect  |       |             |24 (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 housing finance institution 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 housing finance institution a copy of its report on such inspection (2) lt shall be the duty of every officer, employee or other person or persons incharge of the whole or part of the affairs of the housing finance institution to produce to any officer making an inspection under sub-section (/), 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 housing finance institution as the said officer may require of him power to 25 (1) the national housing bank may, for the purpose of the efficient discharge of collect credit its functions under this act, at any time direct any housing finance institution to submit to information 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 housing finance 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 (/) (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 takenfor such loans, advances or other credit facilities; (tii) the guarantees furnished; and (iv) -any other information which has a bearing on the creditworthiness of the borrower      31 (1)     power of na- (3) the national housing bank may, if it considers necessary in the public interest so to do, give directions to housing finance institutions accepting deposits either generally or tional housing bank to collect information from housing to any group of housing finance institutions accepting deposits, and in particular, in respect finance instituof any matters relating to, or connected with, the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received tions as to deposits and to give directions      40 (1)      audit (5) the national housing bank shall furnish to the central government and the reserve bank within three months from the date on which the annual accounts of the national housing bank are closed and balanced, a copy of its balarice 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      49 (1)     penalties (3) if any person— (a) receives any deposit in contravention of any direction given or order made under 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;