Law ยท Statute
The National Housing Bank Act, 1987
The Act that established the National Housing Bank as the apex institution for housing finance in India and gave it the power to promote, finance and, until 2019, regulate housing finance companies. Regulatory control of housing finance companies passed to the Reserve Bank of India in 2019.
- Kind
- Act
- Year
- 1987
- Administered by
- Ministry of Finance
- Law stated as at
What it does
The Act set up the National Housing Bank as a body corporate to operate as a principal agency for housing finance, to promote housing finance institutions, and to provide financial and other support to them. It gave the Bank functions of refinance, lending and supporting the housing finance system, and powers of inspection over the institutions it dealt with. Its text also contains powers to give directions, and section 30A is one of them.
The page is mainly relevant today because of this power to give directions. When the Reserve Bank of India issued its Digital Lending Directions of 8 May 2025, it did so under a list of provisions that includes section 30A of this Act, alongside sections of the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, the Factoring Regulation Act, 2011 and the Credit Information Companies (Regulation) Act, 2005. The site's note on digital lending records the list.
Who it binds
The National Housing Bank itself, the housing finance companies that fall within the Act, and the persons who deal with them. A direction issued under section 30A binds the entity to which it is addressed as a direction, so a breach is a regulatory default in its own right and not a matter of guidance that was not followed.
What moved out of it
Regulation of housing finance companies moved from the National Housing Bank to the Reserve Bank of India in 2019, by amendments to this Act made by the Finance (No. 2) Act, 2019. The Reserve Bank now regulates housing finance companies in the way it regulates non-banking financial companies, and it issues directions for them under its own powers. The Bank remains an institution of refinance and development in the housing sector, and its Act stays in force.
What has changed, and when
The Act dates from 1987 and has been amended since, most notably in 2019 as just described. A reader who finds an old circular of the National Housing Bank on a regulatory point should check whether the Reserve Bank has since replaced it, because the position for housing finance companies has been rebuilt in the Reserve Bank's own instruments.
What turns on it in practice
The point of contact with this site is digital lending. The site's note, on a digital lending now being one instrument, explains that the Digital Lending Directions of 2025 took three earlier circulars and replaced them with one, and moved the default loss guarantee into the same frame. The cover is capped at five per cent of what the portfolio disbursed, held in cash or in something a lender can realise like cash, and invoked within 120 days of a loan going overdue. A housing finance company that lends through an app or a lending service provider is within the same framework as a bank or a non-banking financial company, and the Directions can reach it through the direction-making powers that include this Act.
The fintech and lending work of the practice reads the structure of a lending partnership against the Directions, and the reach of the Act explains why a lender that is a housing finance company is covered. An agreement with a lending service provider should be checked against the guarantee cap, and a default loss guarantee that exceeds it is an arrangement that fails under the Directions even if its commercial terms are sound.
Reference