Central bank shaping up refinancing scheme for middle class housing

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Siddique Islam
The central bank of Bangladesh is going to introduce a refinancing scheme for the housing sector for the first time to meet one of the basic needs of the people, official sources said.
Under the proposed scheme of Bangladesh Bank (BB), people belonging to the lower middle class as well as the middle class will be able to purchase new apartments or construct dwelling houses of maximum 1100 square feet each with financial support from the scheme.
But there will be a mandatory provision for receiving the loan, that is, an applicant must have a maximum monthly gross income of Tk 30,000.
A high-powered committee, headed by BB General Manager Naba Gopal Banik, was formed on May 06 last to formulate the scheme and make recommendations in this connection.
The committee was asked to submit a detailed report by June weighing all the pros and cons of such a fund and outlining its operational modality, the sources mentioned.
"We have already submitted our report to the concerned authorities of the BB for taking necessary measures," a member of the committee told the FE Sunday.
He also said like-minded groups will also be able to take such financial support to construct apartments under set guidelines.
A proposal will be placed at the meeting of the board of directors of the central bank for approval of the initial fund for the scheme, the member added.
The BB has proposed to form a Tk 3.0 billion fund for the first three years with Tk 1.0 billion earmarked for every year under the scheme, the sources noted.
According to the proposed scheme, an applicant will be able to receive maximum Tk 1.20 million for the housing purpose, according to the sources.
The maximum repayment tenure is 16 years with one-year grace period. The rate of interest on such loan is 10 per cent, which will be calculated on a quarterly basis.
Any commercial bank or non-banking financial institution (NBFIs), which will disburse the loan under the scheme, will receive 67 per cent of the disbursed amount from the central bank as refinancing facilities, and the remaining 33 per cent will have to be met by the bank or NBFI from their own funds.
Any bank or NBFI having non-performing loan not beyond 10 per cent will be eligible for the refinancing facilities.
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.