BHBFC offering low-cost housing loans in rural areas

Dhaka,  Thu,  21 September 2017
Published : 18 Jul 2017, 12:21:01 | Updated : 18 Jul 2017, 12:44:32

BHBFC offering low-cost housing loans in rural areas

Tk 14b fund mobilised, its MD tells FE
FE Report
Bangladesh House Building Finance Corporation (BHBFC) has planned to expand its operations, especially in the rural areas, through offering low-cost housing loans to the rural people.

The state-owned entity has already initiated a process of mobilising funds from different sources at home and abroad as part of an effort of ensure housing for all by 2021.

"We will get around Tk 14 billion in this fiscal year from different sources and hope it will spur our activities," BHBFC managing director Debasish Chakrabarty told the FE in an interview on Monday.  

Of the amount, Tk 7.65 billion will come from Islamic Development Bank (IDB) as loan, Tk 1.5 billion from the government as capital and BHBFC itself will collect Tk 5.0 billion through issuing government-guaranteed debenture.

The BHBFC is planning to open 60 new branches across the country, covering all the district headquarters, while manpower in the new organogram will be increased by 1200 from existing 750 people. However, there are only 460 people working at present.   

The recruitment process for more 200 people has started one year back by Bangladesh Bank, but has not yet been completed.

"We should recruit our own people as BHBFC is not under Bangladesh Bank. We are under the finance ministry. If we recruit our own people, it will be easier and faster," he said.

He said the rejuvenated BHBFC's target is to ensure home for all by 2021. "To do so, we have started modernisation of HBFC, which includes automation, building data center and loan installment payments through banks' points of sales," he said, adding that the BHBFC's competitors in the market are smart ones.

"We will have to be smarter to provide a better service to our clients," he said.

He said the BHBFC will sign an agreement with Southeast Bank to make instalment payment system easier.

Under the agreement, Southeast Bank will install their point of sales in all the BHBFC branches so that the clients could pay their instalments by using electronic cards.

The government has recently doubled the house loan ceiling up to Tk 10 million from the BHBFC as well as lowered the interest rates to 8.5-9.5 per cent from existing 10-12 per cent.

Four new loan products were also introduced -- home loans for expatriate Bangladeshis, rural house loans, house development loan and house repair loan.

Under the arrangement with IDB, a separate 'Rural and Peri-Urban Housing Finance Project' will be implemented, mainly to provide low-cost home loans to the lower-income segment of people, who are living in areas outside the metropolitan cities of Dhaka and Chittagong.  

The BHBFC managing director said the interest rate could be reduced further if the credit volume reaches up to Tk 6.0 billion from current disbursement of around of Tk3.5 billion. He also pointed out that the BHBFC has been facing fund shortage for a long time. Now, it has a capital of only Tk1.1 billion.

The state-run organisation has so far collected Tk18.34 billion by issuing debentures since its inception and the current balance of debenture is Tk 3.64 billion.

"We are in talks with the central bank for issuing new debentures of Tk 5.0 billion and hope we will get those in this fiscal year," said Mr Debasish.

He said the new target for BHBFC is participation in the rapid urbanisation in rural areas. It has a plan to shift from urban to rural areas as other housing finance projects do not go there. "We will build low-cost, green, energy-efficient and earthquake-resistant multi-storied homes in rural areas," he added.

He said they were in talks with Bangladesh University of Engineering Technology (BUET) to design 6-stoey low-cost homes for the rural areas. "If we do not build multi-storied building in the rural areas, our agricultural land will be wiped out," he said.  

He said the BHBFC offers simple rate of interest, which is lowest in the domestic market. On the contrary, he added, all other housing finance schemes count compound interest rate.

Established in 1952, the BHBFC is the lone state-owned specialised financial institution of its kind in the country.
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