The Islamic Development Bank (IDB) has come up with $100 million loan for the Bangladesh House Building Finance Corporation (BHBFC). However, it has attached a couple of conditions to the loan, officials said.
The conditions are opening of an 'Islamic window' to run the project and arranging sovereign guarantee from the government against the loan.
The state-run Corporation, now afflicted with serious fund shortage, has agreed to meet the conditions and has sought the finance ministry's assistance to avail the loan to gain financial strength.
Going through immense fund crisis for months, the BHBFC in last June took Tk 2.0 billion loan from the government to continue financing housing projects.
"We could not provide necessary loan last year due to fund crisis. The demand for loan for housing is much higher than our capacity. The IDB loan will help strengthen our capability," BHBFC Managing Director (additional charge) Dr Daulatunnahar Khanam told the FE.
She said, due to fund crisis, the BHBFC even could not go to all districts. "If we get the loan, our target is to reach at least urban areas and its peripheries."
Ms Khanam said the BHBFC was one of the very few state-owned profitable entities and has a rich manpower base. "But the fund shortage has been a problem for us in our efforts to provide adequate services to the people."
She said, the board of directors of the BHBFC has agreed to open 'Islamic window' for the project. The ministry of finance has been requested to arrange sovereign guarantee for the IDB loan.
The people from middle and lower middle income group will be given loan from the fund.
Except the metropolitan areas of Dhaka and Chittagong, districts, sub-district and growth centres will come under the loan facility from the fund.
"Most of the banks have opened separate Islamic window to tap businesses. We also want to open such a window in line with the IDB proposal for the project. Our traditional loan facility will also exist," said Ms Khanam.
The central bank's data shows that some 25 banks and financial institutions are pursuing full- fledged Islamic banking or opened Islamic window to run business.
She said, the IDB loan will reduce the BHBFC's dependency on the government for financial assistance.
A pre-feasibility study of the proposed loan said some 930 multistoried buildings can be built with the fund which will house 8,206 residential units where some 49,236 people will be able to live.
Officials said, after investing the money in the project area, the instalment of the loan can be paid back to the IDB from the possible return as interest and capital.
After returning the loan with interest to the IDB, some Tk 12 billion will remain in the BHBFC's account, which will strengthen its capital base.
The BHBFC has Tk 1.10 billion paid-up capital which is given by the government.
Since its inception, the Corporation has been providing loans to help construct homes. With a small capital base, its outstanding balance now stands at Tk 30.106 billion.
The Corporation provided Tk 2.60 billion as loan in fiscal year 2015-16 and recovered Tk 5.18 billion in the same year. Its non-performing loan stood at 6.19 per cent after the year-end.
Until now, the BHBFC has provided loans for construction of 197,199 housing units.
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