BB raises ceiling of credit for real estate sector

The Bangladesh Bank (BB) on Thursday increased the credit ceiling to help boost the country's real estate sector, reports BSS.

The central bank in a circular said all scheduled banks would now be allowed to offer the highest Taka 12 million (1.2 crore) to a single party as house finance. Currently, the house financing limit is Tk 10 million (1 crore) per party.

The BB said that the loan-margin ratio for fresh loans should be maintained at 70:30 in the event of house finance under consumer financing, meaning any borrower should invest 70 per cent of the cost to get the remaining 30 per cent from a bank as house financing. Banks, however, are free to extend mortgage loans for housing for a period not exceeding 25 years.

The central bank said it raised the credit ceiling "because of price hike of construction materials for housing and real estate".

While inaugurating the REHAB Winter Fair 2014 on December 24, Housing and Public Works Minister Mosharraf Hossain said the government would announce an incentive package for boosting the real estate sector.

At the inaugural programme, Real Estate and Housing Association of Bangladesh (REHAB) Alamgir Shamsul Alamin sought a government incentive for the real-estate sector as the sector saw a continued fall in apartment sales.