The leading bank in India for all housing finance companies, National Housing Bank (NHB) has said that in the following three months it is going to create a mortgage guarantee corporation in the form of non-banking finance company (NBFC). It said that it will set up this mortgage guarantee corporation in collaboration with USA’s United Guaranty Corp, the World Bank's International Finance Corp and the Asian Development Bank. It will serve to offer risk guarantee to lenders against loan defaults.

Even though a full fledged framework is yet to be prepared, it is largely expected that NHB will be the biggest shareholder and the equity capital will be well above Rs 100 Crore. Talking on this issue, the chairman and MD of NHB, S Sridhar said, ‘This would be much in the lines of what the Export Credit Guarantee Corp offers as a cover of risk to exporters. The risk mitigating tool can help banks and lenders cover against defaults in housing loans.’ This way, Sridhar said, the corporation will help boost the overall housing finance market. The National Housing Bank will also offer title indemnity through which lenders as well as buyers can achieve protection against defective titles.