BB launches refinancing scheme for housing sector
Thursday, 19 July 2007
FE Report
The Bangladesh Bank (BB) has introduced a refinancing scheme for the housing sector for the first time as a step towards meeting one of the basic needs of the people, official sources said.
Under the new scheme, people belonging to the middle class and lower middle class will be able to purchase apartments or construct dwelling houses of maximum 1250 square feet each with loans from financial institutions.
An applicant having a monthly income upto Tk 30,000, will be entitled for the loan of maximum Tk 1.50 million for the housing purpose, according to the scheme.
The repayment tenure is 20 years maximum with one-year grace period. The rate of interest on the loan will be 10 per cent and will be calculated on a quarterly basis.
The BB issued a circular in this connection Wednesday and asked the chief executives of all scheduled banks and non-banking financial institutions to follow the instructions for sanctioning housing loan under the new scheme.
The central bank formed a Tk 3.0 billion fund initially for three years with Tk 1.0 billion to be provided every year under the scheme, the sources added.
"We will provide more funds for the scheme if necessary," the BB governor Salehuddin Ahmed told reporters in the central bank after issuing the circular.
He also said the central bank will reimburse the funds under the scheme to the banks and NBFIs quickly to meet the growing demand in the housing sector.
"The banks and NBFIs have to sign a participatory agreement with the concerned department of central bank before disbursement of such funds," the central bank chief noted.
He said the BB has taken up the scheme to meet one of the basic needs of the people as well as creating jobs opportunities through linking relevant sectors.
The commercial banks or NBFIs, which will disburse the loan under the scheme, will receive 75 per cent of the amount from the central bank as refinancing facility, and the remaining 25 per cent will have to be met by the individual banks and NBFI 's from their own funds.
However, the banks or NBFIs having non-performing loan not beyond 10 per cent will be eligible for the refinancing facilities.
On the other hand, the banks or NBFIs, which have already disbursed 10 per cent as housing loan of their total loan portfolios, will not be allowed to sanction loans under the scheme.
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.
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 outlining its operational modality, the sources added.
Later, the committee submitted their report to the authorities concerned for taking necessary measures.
On July 04 last, the board of directors of the central bank reviewed the report on refinancing scheme for housing sector and asked the committee to amend a few proposals particularly the size of house or apartment and amount of loan.
Sources, however, said the central bank issued the circular in line with the board of directors' advice.
The Bangladesh Bank (BB) has introduced a refinancing scheme for the housing sector for the first time as a step towards meeting one of the basic needs of the people, official sources said.
Under the new scheme, people belonging to the middle class and lower middle class will be able to purchase apartments or construct dwelling houses of maximum 1250 square feet each with loans from financial institutions.
An applicant having a monthly income upto Tk 30,000, will be entitled for the loan of maximum Tk 1.50 million for the housing purpose, according to the scheme.
The repayment tenure is 20 years maximum with one-year grace period. The rate of interest on the loan will be 10 per cent and will be calculated on a quarterly basis.
The BB issued a circular in this connection Wednesday and asked the chief executives of all scheduled banks and non-banking financial institutions to follow the instructions for sanctioning housing loan under the new scheme.
The central bank formed a Tk 3.0 billion fund initially for three years with Tk 1.0 billion to be provided every year under the scheme, the sources added.
"We will provide more funds for the scheme if necessary," the BB governor Salehuddin Ahmed told reporters in the central bank after issuing the circular.
He also said the central bank will reimburse the funds under the scheme to the banks and NBFIs quickly to meet the growing demand in the housing sector.
"The banks and NBFIs have to sign a participatory agreement with the concerned department of central bank before disbursement of such funds," the central bank chief noted.
He said the BB has taken up the scheme to meet one of the basic needs of the people as well as creating jobs opportunities through linking relevant sectors.
The commercial banks or NBFIs, which will disburse the loan under the scheme, will receive 75 per cent of the amount from the central bank as refinancing facility, and the remaining 25 per cent will have to be met by the individual banks and NBFI 's from their own funds.
However, the banks or NBFIs having non-performing loan not beyond 10 per cent will be eligible for the refinancing facilities.
On the other hand, the banks or NBFIs, which have already disbursed 10 per cent as housing loan of their total loan portfolios, will not be allowed to sanction loans under the scheme.
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.
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 outlining its operational modality, the sources added.
Later, the committee submitted their report to the authorities concerned for taking necessary measures.
On July 04 last, the board of directors of the central bank reviewed the report on refinancing scheme for housing sector and asked the committee to amend a few proposals particularly the size of house or apartment and amount of loan.
Sources, however, said the central bank issued the circular in line with the board of directors' advice.