**BA cic& .i••~

NHB(ND)/RMMD/2013January 29, 2013

To

* =* ****BA cic&.i ••~ NATIONAL\ _.-... HOUSING BANK

, *"*'.*All Arrangers

Invitation of offer for arranging 1 subscribing Tax Free Secured Redeemable Non-Convertible Bonds of Face Value of ~ 10,00,0001- each in the nature of Debentures having taxbenefits under section 10 (15) (iv) (h) of the Income Tax Act, 1961, as amended ("Bonds") foran amount aggregating ~ 100 crore with an option to retain over subscription of up to ~ 400crore by National Housing Bank ("NHB" or the "Issuer" or the "Bank") by way of privateplacement through book building route.

1. National Housing Bank has been established under the National Housing Bank Act,]987 (Central Act No. 53 of ]987) to operate as a principal agency to promote housing financeinstitutions both at local and regional levels and to provide financial and other support to suchinstitutions and for matters connected therewith or incidental thereto. NHB is wholly owned bythe Reserve Bank of India. NHB has been notified as a Public Financial Institution (PFI) undersection 4A of the Companies Act, 1956.NHB performs three main activities viz., regulation andsupervision of housing finance companies, promotion and development of housing financemarket and providing financial assistance to housing finance institutions, banks etc.

2. The Central Board of Direct Taxes ("CBDT"), Department of Revenue, Ministry ofFinance, Government of India, has in exercise of the powers conferred by item (h) of sub-clause(iv) of clause (15) of section 10 of the Income-tax Act, 1961 (43 of 1961) issued notification no.46/2012.F.No. 178/60/2012-(ITA.I)dated November 06, 2012 wherein NHB has been authorizedto raise tax free bonds aggregating upto ~ 5,000crore in the financial year 2012-13.

3. As per extant provision, while adopting the private placement route to issue the Bonds,NHB shall adopt the book building route wherein it shall specify the ceiling coupon rate as perterms of the Notification and bids shall be invited and allotment be made at the price bid. TheBonds shall be paid for and shall be issued only at a premium (neither at par nor discount to theissue price) but with a fixed coupon so that the Bonds can be traded under a single InternationalSecurities Identification Number (ISIN). The yield shall be worked out based on the pricequoted and then allotment shall be done for best price (lowest yield).

4. In pursuance of the above, the Bank proposes to issue Tax Free Secured RedeemableNon-Convertible Bonds of face value of ~ 10,00,000/-each in the nature of Debentures havingtax benefits under section 10 (15) (iv) (h) of the Income Tax Act, 1961, ("Bonds") for a tenure of10 years, aggregating ~ 100 crore with an option to retain over subscription of upto ~ 400 croreby way of private placement through book building route.

, ' ",1'." \~':~;:)~ ..'. ~J~ ~ tiP c5 ~ ~ ~ Wholly owned by R8881'V8 Bank of India '\:;~~~:.~'"

~ 5--q, ~~ '('ft1', ~ ~ ~, ~ m, Of( ~-110003 Core 5-A, 4th Floor, India Habitat Centre, Lodhi Road, N~Delhi-110003

~ oj. lfi. t. -q<ffi-011-2464 9031-35 m :011-2464 6988,2464 9041 Phone: PBX 011-2464 9031-35 Fax: 011-2464 6988, 2464 9041~ : www.nhb.org.in t-lf<;r : [email protected] tfR f.Icrm ~ Website: www.nhb.org.in E-mail: [email protected] Gram: NIWAS Bank

"~ " ~ q?ll'ql-< em ttqlctld cp-<dl ~"

5. Bid can be mobilized from the following segments of eligible investors as per rates ofbrokerage prescribed hereunder:

Sr. Brokerage payable onNo Segments of eligible investors face value amount of

Bonds mobilized by youand retained by NHB

1. Qualified Institutional Buyers (JlQIBS") @ 0.05% (inclusive ofQIBs shall have the same meaning as assigned to them in the service tax)Securities and Exchange Board of India (Disclosure and InvestorProtection) Guidelines, 2000

II. Corporates * @ 0.10% (inclusive of

Companies; Bodies Corporate; service tax)

III. High Net Worth Individuals @ 0.15% (inclusive ofIndividual Investors applying for more than ~ 10 lakh in the Issue service tax)

* Companies may refer to Section 372 A of the Companies Act, 1956 before investing in theIssue

The issue schedule shall be as under:

Book Opening Date & Time Tuesday, January 29, 2013 (from 11 a.m.)Book Closing Date & Time Thursday, January 31, 2013 (upto 3 p.m.)Intimation of allocation to investors Thursday, January 31, 2013 (Latest by 5 p.m.)Issue Opening Date" Friday, February 01, 2013Issue Closing Date" Friday, February 01, 2013Pay-in-Date" Friday, February 01, 2013Deemed Date of Allotment" Friday, February 01, 2013

"The Issuer reserves its sole and absolute right to modify (pre-pone/postpone) the above issueschedule without giving any reasons or prior notice. In such a case, investors shall be intimatedabout the revised time schedule by the Issuer. The Issuer also reserves the right to keep multipleDeemed Date(s) of Allotment at its sole and absolute discretion without any notice. In case if theBook Closing Date/Pay in Dates is/are changed (pre-poned/postponed), the Deemed Date ofAllotment may also be changed (pre-paned/postponed) by the Issuer at its sole and absolutediscretion.

In case if your firm is interested, you may bid / mobilize bids (as per format enclosed in theDisclosure Document) from the above segments or eligible investors as per rate of brokerageprescribed above.

In case if the aggregate face value amount of bids mobilized by an individual arranger andretained by NHB is ~ 20 crore or more, the Bank shall issue a letter of acknowledgement to

such arranger(s) and shall include its /their name(s) ill the final Disclosure Documents as"Arrangers to the Issue" .

The bid(s) mobilized should reach the undersigned on or before 3 p.m. of January 31, 2013at thefollowing address:

K. ChakravarthyDy. General ManagerResource Mobilisation and Management DepartmentNational Housing BankCore 5A, 3rd FloorIndia Habitat Centre, Lodhi RoadNew Delhi - 110003Tel: +91-11-24617832

No bid will be accepted after 3 p.m. of January 31, 2013.

NHB reserves the right not to accept and reject any or all the bids received from the bidder(s)without assigning any reason thereof.

The Draft Disclosure Document for the Bond Issue containing details of the Issue is beingprovided to you separately.

Yours faithfully,

ct~~(K.Chakravarthy)Depu ty General ManagerNational Housing Bank

1

SUMMARY TERM SHEET - DRAFT Security Name 6.85 % NHB Tax Free Bond 2023 Series III Issuer National Housing Bank (“NHB”/ the “Issuer”/the “Bank”) Type of Instrument NHB Tax Free Secured, Redeemable, Non-Convertible Bonds in the

nature of Debentures Nature of Instrument Secured Mode of Issue Private Placement Eligible Investors • Qualified Institutional Buyers (QIB)

• Corporates • High Net Worth Individuals (HNIs)

Listing (including name of stock Exchange(s) where it will be listed and timeline for listing)

Proposed to be listed at NSE. The Issue will be listed on the Wholesale Debt Market Segment of the National Stock Exchange within 20 days from the deemed date of Allotment.

Rating of the Instrument AAA/Stable by CRISIL Ratings Ltd., CARE AAA by CARE Ratings. Issue Size 1000 Secured Redeemable Non-Convertible Bonds of the face value of

10 lakh each for cash, aggregating to 100 crore (“the Issue”) Option to retain oversubscription (Amount)

4000 Secured Redeemable Non-Convertible Bonds of the face value of 10 lakh each for cash, aggregating to 400 crore (“Green shoe

option”) Objects of the Issue To mobilize long term resources for providing financial assistance for

housing or for any other purpose as laid down in the NHB Act, 1987. Details of the utilization of the Proceeds

The proceeds will be utilized for normal business activities of NHB and for such other purposes as may be decided by NHB’s Board and as permissible under the NHB Act, 1987.

Coupon Rate 6.85 % Step Up/Step Down Coupon Rate

NA

Coupon payment frequency Annual Coupon payment dates First Interest payment date: 01-02-2014

Subsequent Interest payment dates: 1st February every year till redemption.

Coupon Type Fixed Coupon Reset Process (including rates, spread, effective date, interest rate cap and floor etc).

N.A.

Day Count Basis Actual/Actual Interest on Application Money* The interest cheque / DD/RTGS/NEFT/ECS for interest on application

money (along with Refund orders, in case of refund of application money, if any) shall be dispatched by NHB within 15 days from the Deemed date of allotment.

Default interest rate In case of default in payment of Interest and/or principal redemption on the due dates, additional interest at the minimum of the rate prescribed by SEBI over the coupon rate will be payable by the Issuer for the defaulting period

Tenor 10 years from deemed date of allotment Date of Redemption 01-02-2023 Redemption amount At par Redemption Premium/Discount At par

2

Issue Price To be determined through book building route Discount at which security is issued & the effective yield as a result of such discount

NA

Put & Call Option Date NA Put & Call Option Price NA Put & Call Notification Time NA Face Value 10,00,000 (Rupees Ten lakh only) per bond Minimum Application Size 10 bonds and then in multiple of 1 bond Issue Opening Date 01-02-2013 Issue Closing Date 01-02-2013 Pay-in-date 01-02-2013 Deemed Date of allotment** 01-02-2013 Issuance & trading mode of instrument

In Demat Only

Settlement mode of the instrument

The bonds held in the dematerialized form shall be taken as discharged on payment of the redemption amount by NHB on maturity to the registered bondholders whose name appear in the register of bondholders on the record date. Such payment will be a legal discharge of the liability of the bond towards the bondholders.

Depository NSDL Business Day Convention Should any of the dates defined above or elsewhere in the Offer

Document, excepting the Deemed Date of Allotment, fall on a Saturday, Sunday or a Public Holiday, the next working day shall be considered as the effective date. (Public Holiday being a day on which commercial banks are closed for business in the city of Mumbai)

Record Date 15 calendar days prior to each coupon payment date Security The Bonds shall be secured by way of first pari passu charge on the

book debts of the Issuer, as may be agreed between the Issuer and the Trustees with a minimum security cover of one time of the aggregate face value of amount of Bonds outstanding at all times.

Transaction Documents The Issuer has executed/ shall execute the documents including but not limited to the following in connection with the issue: 1. Consent from the Trustees to the Bond-holders and Registrars to

the Issue to act in their respective capacities; 2. In-principle approval from NSE for listing of Bonds; 3. Tripartite Agreement between the issuer; Registrar and NSDL for

issue of Bonds in dematerialized form; 4. Rating Letter from CRISIL Ratings & CARE Ratings. 5. Debenture Trusteeship Agreement; 6. Trust Deed

Conditions precedent to subscription of Bond

The subscription from investors shall be accepted for allocation and allotment by the Issuer subject to the following:

1. Rating letter(s) from the aforesaid rating agency(ies) not being more than one month old from the issue opening date:

2. Letter from the trustee conveying their consent to act as Trustee for the Bondholder(s);

3. In-principle approval from NSE for listing of Bonds.

3

Conditions subsequent to subscription of Bond

The Issuer shall ensure that the following document are executed/ activities are completed as per time frame mentioned elsewhere in this Disclosure Document:

1. Credit of demat accounts(s) of the allottee(s) by number of Bonds allotted within 2 working days from the Deemed Date of Allotment;

2. The Issue will be listed on the Wholesale Debt Market Segment of the National Stock Exchange within 20 days from the deemed date of Allotment.

3. Execution of Trust Deed for creation of security within time frame prescribed in the relevant regulation/Act/rules etc.

Beside the Issuer shall perform all activities, whether mandatory of otherwise, as mentioned elsewhere in this Disclosure document.

Events of Default Default in payment of principal sums of the bonds/Default in payment of interest/Default in performance of covenants and conditions/Supply of misleading information/Inability to pay debts/Proceedings against the Bank/Inability to pay debts on maturity/Liquidation or dissolution of the Bank/Extra-ordinary circumstances.

Provision related to cross default clause

NA (not applicable)

Registrar & Transfer Agent M/s Beetal Financial & Computer Services (P) Ltd. Collection Banker HDFC Bank RTGS details Beneficiary Name : National Housing Bank

Bank Account Details: HDFC Bank Nanik Motwani Marg, Fort Branch, Mumbai A/c No. 00600350008114 IFSC Code : HDFC0000060

Role and Responsibilities of Debenture Trustees

The trustees shall protect the interest of the bondholders in the event of default by NHB in regard to timely payment of interest and repayment of principal and shall take necessary action at the cost of NHB. The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, the Trust Deed, Disclosure Document and all other related transaction documents.

Governing Law and Jurisdiction The Bonds are governed by and shall be construed in accordance with the existing Indian laws as applicable in the city of Delhi. Any dispute arising in respect thereof will be subject to the exclusive jurisdiction of the courts and tribunals in the city of Delhi.

*subject to deduction of tax at source as applicable **NHB reserves its sole & absolute right to modify (pre-pone/post pone) the issue opening /closing/pay-in-date(s) without giving any reasons or prior notice. In such case, Investors/Arrangers shall be intimated about the revised time schedule by NHB.

FORMAT OF LETTER OF COMMITMENT FROM INVESTORS (To be furnished on Investors letter head) (Please indicate STD Code, Tel & Fax Nos.)

Through (Arranger’s Name: __________________________) Date: January 29, 2013 Deputy General Manager Resources Mobilsation and Management Department National Housing Bank Core 5A, India Habitat Centre, Lodhi Road, New Delhi – 110003 Dear Sir (s) We refer to your Disclosure Document dated January 29, 2013 for Private Placement of Tax Free Secured Redeemable Non-Convertible Bonds of face value of 10,00,000/- each in the nature of Debentures having tax benefits under section 10 (15) (IV) (h) of The Income Tax Act, 1961, as amended (“Bonds”) to be issued by National Housing Bank for an amount aggregating 100 crore with an option to retain over subscription of up to

400 crore through book building route, addressed to us. We hereby commit to invest in the aforesaid issue. Our requirement is shown in the following table:

A B C Bid Price

(per 100/- face value ) (issue price shall be in multiples of 01 paise and shall not be equal to or lower than 100/-)

No. of Bonds applied (min. 10 Bonds and in multiples

of 1 Bond thereafter)

Total face value (B x 10,00,000) (in )

[Amount Payable on allotment (in )=No. of Bonds allotted x A x 10,000] This letter is an irrevocable commitment from us to subscribe to the said number of Bonds, subject to your acceptance, unless superseded by a subsequent letter from us, delivered to you before the closure of the book i.e. January 31, 2013 (3.00 p.m.) and the bid would be valid up to February 01, 2013. Kindly allocate to us the desired number of Bonds or any such lesser quantity as may be decided by you. As outlined above in the Disclosure Document for Private Placement, we undertake to send our Application Form along with the proof of remittance of application money and other necessary documents before February01, 2013 or such other date that may be intimated to us in the event of the closure of book prior to/after January 31, 2013 (03.00 p.m.) in respect of the Bonds that may be allocated to us. Details of our Demat Account are as under. Name of the Investors/Beneficiary : DP Name : DP ID No. : Client ID No. : Thanking you, Yours faithfully, (Name & Designation) For (name of Investor) Authorised Signatory Tel. No. __________________ Fax No. _________________