Project Finance

Part A – Objectives

The Project Finance (direct lending) activities of the Bank are being undertaken in terms of Section 14 (ba) of the Act. The aim of the Bank’s Project Finance Policy is to facilitate increase in the overall housing stock in the country through supply side intervention with special emphasis on the housing needs of the economically weaker sections of society.

Part B– Eligible Entities

1. Public Agencies

The Bank seeks to provide financial assistance to the following public agencies for their housing programmes:

• State Housing Boards/Improvement Trusts

• State Slum Clearance Boards/Authorities

• Development Authorities

• Municipal Corporations/Councils, Urban Local Bodies

• New Town Development Agencies

• Local Authorities for housing & urban development

• Housing Welfare Organizations of Central and State Government employees like CGEWHO, AWHO, AFNHB, IRWO etc.

• Other Agencies set up for specific housing programmes.

• SPVs set up by public housing agencies / public financial institutions, solely or jointly with private sector either for specific project or on a continuing basis.

• Affordable Housing projects under Public Private Partnership models in line with State Housing Policies wherein Public Agencies appointed as a nodal agency for construction/ implementing large scale construction of Affordable Housing (with focus on EWS & LIG housing) by involving Private developers in the construction of EWS/LIG categories of houses on a turnkey basis.

The following projects of Public Housing Agencies will be eligible for financial support:

• Slum rehabilitation/slum improvement Projects.

• Residential Housing Projects.

• Township cum housing development project.

• Land acquisition for the purpose of township and housing development.

• Land development for housing construction.

• Turn-key housing projects

• Programme lending for special housing projects undertaken consequent to natural calamities.

• Infrastructure development for housing settlements.

• Rental housing projects

2. Corporates:

Facility for construction financing will be extended to Corporates* for their employees’ rental/ownership housing.

*Corporates shall mean Public Sector Undertakings (PSUs) Central and State, for their staff residential housing projects

Part C – Types of Financial Facilities

• Term Loans – Depending on the purpose of the loan, term loans may be provided to any of the eligible agencies for a tenure not exceeding 15 years. Short term loans may be provided to the borrowers for a period not exceeding 2 years to meet their short-term liquidity requirements..

Part D – Terms and Conditions

1. Tenure of Loans

Project finance shall be made available for a maximum period not exceeding 15 years including moratorium period, if any.

2. Security

Depending on the nature of the borrower, any one or more of the following securities may be obtained::

• Mortgage / charge over immovable property / charge over receivables / Bank guarantee / Government guarantee / Fixed Deposit Receipts of Scheduled Commercial Banks / Corporate guarantee

• Any other security, as acceptable to NHB on a case to case basis

3. Extent of Security

Public Sector Agencies / Joint Sector Agencies –minimum 100% of the amount of loan.

4. Validity of Sanction

The sanction shall be valid for six months

5. Rates of Interest

The rates of interest for all the project finance loans shall be based on Internal Credit Rating of the agencies/project and the tenure of the loan.

The Bank may extend financial assistance for Water and Sanitation Programmes undertaken by Urban Local Bodies (ULBs) out of the Special Fund at interest rate of 4.00% p.a. The maximum amount sanctioned per State for such projects would be limited to ₹5.00 crores.

6. Pre-payment Charges

Pre-payment of loans may be allowed after receiving one month’s notice and shall be subject to pre-payment charges of 0.50% of the amount to be prepaid.

7. Repayment

• Repayment of principal will be made in equal quarterly/monthly installments which shall commence on the first day of succeeding quarter/month after the moratorium period

• Payment of interest will be made on monthly/quarterly basis, including during the moratorium period, before repayment of the installments becomes due.

8. Service fee

A service fee (upfront) of 0.5% of the loan amount will be charged from all borrowers in respect of the proposals submitted by them.

9. Know Your Customer

The KYC of borrowers would be carried out as per the KYC Policy of the Bank