Banks and home finance companies to get risk cover on home loan defaults; NHB to set up mortgage Guarantee Company

National Housing Bank (NHB) plans to set up a mortgage guarantee firm as a joint venture with global financial institutions to provide risk cover to lenders against defaults in housing loans.

NHB is in talk with global partners such as International Finance Corp (IFC) and Asian Development Bank (ADB) for the venture, said S Sridhar, chairman and managing director of NHB said at a conference organised by industry body Federation of Indian Chambers of Commerce and Industry (FICCI).

The company is also planning to make equity investment in housing finance companies which are funding the rural housing by picking up stakes in the range of 11 per cent to 26 per cent.

NHB is also planning to launch a housing index for India. The "Residex" which will be launched in 2-3 weeks and will initially include property prices of five cities. The names of the cities were not disclosed by NHB.