Press Release July 01, 2025 NATIONAL HOUSING BANK Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
BOND	10000.00	ACUITE AAA | Stable | Assigned	-
Total Outstanding	10000.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has assigned the long-term rating of ‘ACUITE AAA’ (read as ACUITE triple A) on the Rs. 10000.00 crore Proposed Bonds of National Housing Bank (NHB). The outlook is 'Stable'. Rationale for Rating The rating is driven by NHB's position as the Apex level institution and development agency for housing finance and sovereign support with 100% ownership with the GoI. Given the strategic importance of NHB, GoI has a track record of extending funding support to NHB in the form of regular allocation of affordable housing funds and allowing NHB to raise funds through tax-free bonds. Acuite expects that, GoI will continue to provide support to NHB, mainly on account of latter’s systemic importance by being the supervisor and the sole agency for refinancing HFCs’ loans in India. The rating further takes into consideration the consistent growth in loan book along with a robust financial profile because of the comfortable capital-structure and strong liquidity position. NHB also maintains a healthy asset quality which is denoted by a GNPA of 0.69% in FY-24 and a NNPA of Nil. However, the rating is constrained by the modest earnings profile and the concentration of loans in the loanbook.

About the company

­­NHB was established in 1988 under an act of Parliament, with the status of an apex financial institution for housing finance in India and a setup to refinance, regulate and supervise HFCs and develop the domestic housing finance market in the country. However, in 2019, the regulatory powers of NHB over HFCs were transferred to RBI. GoI currently holds 100% of the stake in NHB. NHB provides refinance support to SCBs, HFCs, RRBs, other development cooperative societies, and development banks in the housing finance sector.

Unsupported Rating

­Not Applicable

Analytical Approach

­­Acuite has considered NHB standalone while factoring in the strong linkages between the GoI and NHB where GoI has 100% ownership of NHB and benefits in relation to representation on the board from various ministries.

Key Rating Drivers

Strength

Ownership benefit from GOI NHB’s 100% sovereign ownership and strong linkage with GoI is expected to continue even in the medium to long-run. The GoI has a track record of extending funding support to NHB in the form of regular allocation of affordable housing funds from which NHB can borrow and lend further at competitive rates. The GoI, in the past, allowed NHB to raise funds through tax-free bonds. Moreover, it is expected that GoI will continue to provide support to NHB, mainly on account of latter’s systemic importance by being the supervisor and the sole agency for refinancing HFCs’ loans in India. Strategic Importance Given the housing finance segment has a shortage of financing options among low-income segments, NHB plays a role of being a significant public policy institution in adopting a multi-pronged approach to tackle this problem. The bank has a strategic importance to the GoI in implementing its government schemes, like the Pradhan Mantri Awas Yojna Urban (PMAY-U) which is a credit linked subsidy scheme (CLSS). This helps the government to promote affordable housing for the weaker sections of society by providing concessional loan assistance to mortgage lenders for better home ownership among low-income households, which has directly improved the flow of credit to low-income segments of society. The promotion of financial inclusion amongst the low-income society is linked to NHB being identified as the central nodal agency by the GoI to execute the CLSS vertical of PMAY.  Comfortable asset quality NHB’s asset quality indicators have remained comfortable, with funds primarily extended to banks and HFCs with strong creditworthiness. There were no further slippages in the portfolio after FY2020 and the reported asset quality remains comfortable with GNPAs of 0.69% as on June 30, 2024 (0.77% as on June 30 2023; 2.07% as on June 30, 2022). Moreover, the GNPA of 0.69% is primarily attributable to one account of Dewan Housing Finance Limited (DHFL) which has been fully provisioned for by the bank. Going forward, NHB’s asset quality is expected to remain comfortable. As per the NHB Act, NHB has mandates from scheduled banks, regional rural banks, and urban cooperative banks for direct debits from their current accounts with the RBI if there is a delay or default in the payment of refinance instalments. Moreover, as NHB functions as a supervisor of HFCs, its asset quality and collection efficiency in this segment is far superior.

Weakness

­Moderate earnings profile As NHB plays a developmental role in the growth of the housing finance sector in India and is the primary agency for providing refinance for housing loans to HFCs and various other PLIs, it operates with lower NIMs. Its NIM improved to 2.49% in FY2024 from 2.13% in FY2023 because of higher yields. This, along with the enhanced operating efficiency, aided in some improvement in the overall earnings is depicted through an RoAA of 1.57% and an RoCE of 12.04% in FY2024 (1.40% and 10.22%, respectively, in FY2023). Going forward, NHB is expected to continue reporting profitability in line with the historical averages. Relatively higher credit concentration NHB has a concentrated lending portfolio with the top 20 borrowers accounting for 89% of the total advances in FY2024. The wholesale nature of the loans exposes NHB to lumpy slippages in the asset quality and could consequently impair the profitability ratios. Nevertheless, with a large proportion of the loan book consisting of exposures to higher-rated banks and HFCs, the risk is mitigated to some extent. Substantial Contingent Liabilities The bank has significant contingent liabilities of Rs. 1,479 Cr as of FY24 (FY23 Rs1,469 Cr). These contingent liabilities mostly relate to arbitration/court cases. NHB has actively pursued the resolution of these disputes and claims. It is expected that the GoI will provide additional support in case NHB’s contingent liabilities are to materialise.

ESG Factors Relevant for Rating

­The National Housing Bank was established under the National Housing Bank Act, 1987, and hence the provisions relating to CSR under the Companies Act, 2013 are not applicable. However, as a voluntary act, the Bank contributed Rs 1,50,00,000/- (Rupees One crore Fifty Lakh) under Social Outreach Activities which included Rs 8.44 lakh towards Chetna Sansthan(Lucknow) for purchase of equipment and materials to help in skill development, rehabilitation, and vocational training of DIVYANGJAN children, Rs.3.25 lakh towards 3 Government schools in Bhopal (Jahangirabad, Naveen and Amrawat Kalan) for purchase of 4 water coolers, Rs 8.18 lakh towards Financial Assistance to Punuruthan Samrasata Gurukulam Madhymic Asharam Shala (Mumbai) for purchasing of Ayurvedic Lab Equipments for School and Rs. 130.13 lakh to Prime Minister’s National Relief Fund. (PMNRF) during FY 2023-24.

Rating Sensitivity

­Factors likely to lead to Rating Actions ­Rebate in the support from the GoI Contraction in the shareholding from the GoI Slippages of large accounts

All Covenants

­Currently not available, since these are Proposed Bonds.

Liquidity Position

Adequate

­­The bank’s liquidity position is supported by sovereign ownership and stable asset liability profile. NHB has adequately matched its asset liability profile as on June 30, 2024.

Outlook:

­Stable

Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

­ Particulars Unit FY24 (Actual) FY23 (Actual) Interest Income Rs. Cr. 5,926.81 4,550.83 Interest Expense Rs. Cr. 3,896.34 2,971.89 Profit After Tax (PAT) Rs. Cr. 1,663.60 1,261.76 Deposits Rs. Cr. 50,437.70 51,472.02 Investments Rs. Cr. 9,714.86 6731.58 Capital Adequacy (%) 16.38 15.17 Return on Average Assets (RoAA) (%) 1.57 1.40 Gross NPA (%) 0.69 0.77 Net NPA (%) Nil Nil

Status of non-cooperation with previous CRA (if applicable):

­None

Any other information

­None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm • State Government Ratings : https://www.acuite.in/view-rating-criteria-26.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

­Not Applicable

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Not Applicable Not avl. / Not appl. Proposed Bond Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10000.00 Simple ACUITE AAA | Stable | Assigned

Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Shabad Palakkal Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

­Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.