NATIONAL HOUSING BANK

(Wholly owned by the Reserve Bank of India )

New Delhi

THE HOUSING FINANCE COMPANIES (NHB) DIRECTIONS, 2001

Direction No. NHB.HFC.DIR.8/CMD/2004 dated 18 th May 2004

The National Housing Bank having considered it necessary in the public interest and being satisfied that, for the purpose of enabling the National Housing Bank to regulate the housing finance system of the country to its advantage, it is necessary so to do, hereby in exercise of the powers conferred by Sections 30A and 31 of the National Housing Bank Act, 1987 (53 of 1987) and all the powers enabling it in this behalf, directs that the Housing Finance Companies (NHB) Directions, 2001 shall, with immediate effect, be further amended in the following manner, namely:

In paragraph 22,

In sub-paragraph (1) shall be substituted by the following, namely,-

“(1) (a) The Board of Directors of every housing finance company shall frame investment policy for the company and implement the same;

(b) The criteria to classify the investments in to current and long term investments shall be spelt out by the Board of the Company in the investment policy;

(c) Investments in securities shall be classified in to current and long term, at the time of making each investment;

(d) (i) There shall be no inter-class transfer on ad-hoc basis;

(ii) The inter-class transfer, if warranted, shall be effected only at the beginning of each half year, on April 1 or October 1, with the approval of the Board;

(iii) The investments shall be transferred scrip wise, from current to long term or vice a versa, at book value or market value, whichever is lower;

(iv) The depreciation, if any, in each scrip shall be fully provided for and appreciation, if any, shall be ignored;

(v) The depreciation in one scrip shall not be set off against appreciation in another scrip, at the time of such inter-class transfer, even in respect of the scrips of the same category”.

2. Sub-paragraph (4) shall be substituted by the following, namely,-

“(4) Unquoted equity shares in the nature of current investments shall be valued at cost or break up value, whichever is lower. Where the balance sheet of the investee company is not available for two years, such shares shall be valued at rupee one per company”.

3. Sub-paragraph (5) shall be substituted by the following, namely,-

“(5) Unquoted preference shares in the nature of current investments shall be valued at cost or face value or the net asset value whichever is less. In case the net asset value is negative or the balance sheet of the investee company is not available for two years, it should be valued at rupee one per company.”

Sd/-

(V. Sridar)

Chairman & Managing Director