Understanding the Establishment of National Housing Bank (NHB)

The question asks about the parent institution of the National Housing Bank (NHB) at the time of its establishment in 1987. Understanding the origin and initial structure of key financial institutions is crucial for comprehending the Indian financial system.

Establishment of National Housing Bank

The National Housing Bank (NHB) was established in 1988 under the National Housing Bank Act, 1987. Its primary mandate is to operate as a principal agency to promote housing finance institutions and to provide financial and other support to such institutions.

At its inception, the National Housing Bank was created as a wholly-owned subsidiary of a major regulatory and developmental body in India. Let's look at the options provided:

• State Bank of India (SBI): SBI is a major public sector commercial bank. While significant, it was not the parent body for the establishment of NHB.
• Life Insurance Corporation of India (LIC): LIC is a large insurance and investment corporation. It was not the founding parent of NHB.
• Reserve Bank of India (RBI): The Reserve Bank of India is the central banking institution regulating the Indian financial sector. The National Housing Bank was indeed established as a wholly-owned subsidiary of the Reserve Bank of India in 1988 under the NHB Act, 1987.
• Industrial Finance Corporation of India (IFCI): IFCI is a development financial institution primarily focused on industrial sector finance. It was not the parent of NHB.

Based on the historical facts regarding the establishment of financial institutions in India, the National Housing Bank was founded as a wholly-owned subsidiary of the Reserve Bank of India.

Analyzing the Options

Let's summarize the initial parentage based on the options:

Therefore, the institution of which National Housing Bank was a wholly-owned subsidiary at its establishment in 1987 (Act passed) / 1988 (Operational) was the Reserve Bank of India.

Revision Table: Key Financial Institutions

Additional Information on National Housing Bank and RBI

While the National Housing Bank was initially a wholly-owned subsidiary of the Reserve Bank of India, the ownership structure has changed over time. In 2019, the Reserve Bank of India divested its entire stake in NHB to the Government of India. This change was part of a process where RBI exited entities where it had a regulatory role to avoid potential conflicts of interest. However, at the time of its establishment as specified in the question (1987/1988), RBI was the sole owner.

The National Housing Bank plays a vital role in the Indian housing finance sector by regulating Housing Finance Companies (HFCs), providing refinance facilities, and undertaking housing development programs.