BB's housing loan scheme gets encouraging response

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Siddique Islam
Housing loan under the refinancing scheme of the central bank has started getting good response following relaxation of rules and regulations.
Nearly Tk 820 million was disbursed by 19 banks and financial institutions as of September 15 from the Tk 3.0 billion fund, according to the central bank statistics.
"We expect that the disbursement of the credit will cross Tk 1.0 billion by the end of this month," a senior official of the Bangladesh Bank (BB) told the FE.
He also said at least Tk 200 million more will be disbursed by this month in line with requirements of the commercial banks and financial institutions.
On July 18, 2007, the central bank formed a Tk 3.0 billion fund initially for three years making a provision of replenishment with Tk 1.0 billion a year aiming to meet one of the basic needs of people.
The scheme failed to get a desired response initially due mainly to higher interest rate and partial refinancing facility given to the commercial banks and non-banking financial institutions (NBFIs), market operators said.
On May 15 last, the central bank relaxed its regulations slashing interest rates on its housing sector refinancing scheme to nine per cent from 10 per cent aiming to popularise the scheme.
Currently, the central bank is providing 100 per cent refinancing facility instead of 75 per cent earlier to encourage the commercial banks and NBFIs to invest in the sector.
Meanwhile, 31 commercial banks and NBFIs have already signed agreements with the central bank to disburse the housing loans among the people belonging to the middle and lower middle class.
Commercial banks or NBFIs having non-performing loan not beyond 15 per cent of outstanding loan are eligible for the refinancing facilities under the scheme. The central bank earlier allowed 10 per cent of non-performing loan for participation in the scheme.
"We are able to disburse such loan to the clients within seven to ten working days after verification of all documents," Chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA) Anis A Khan told the FE Saturday.
Mr. Khan also Chief Executive Officer (CEO) and Managing Director of the IDLC Finance Limited said that the momentum of the loan disbursement has increased recently following relaxation of regulations by the central bank.
At least 12 NBFIs out 19 have already disbursed such loans to their clients to meet the long cherished dream of owning a house by an individual, the BB's data showed.
"The NBFIs have more interest than the banks in the scheme because they do not require funds of their own for offering loan," Managing Director of the Industrial and Infrastructure Development Finance Company Limited (IIDFC) Asaduzzaman Khan told the FE.

Mr. Khan, the senior most executive director of the central bank prior to joining the IIDFC, also said the central bank provides such refinance facility to the banks and NBFIs in less than a month from the date of application.
Under the BB's scheme, an applicant having a monthly income upto Tk 50,000 will be entitled for the loan of maximum Tk 2.0 million for the housing purpose.
The people, who are living in six city corporations as well as in the municipality areas of Tongi, Savar, Gazipur and Narayanganj, will be eligible for such loan facilities.
The repayment tenure of the loan is 20 years maximum with a one-year grace period.