Retail housing finance safer than any other lending

The performance relating to home loan offered by banks and non-bank financial institutions (NBFIs) in Bangladesh is generally stronger than in many other lending segments, though it is not without risk. The loans are long-term, asset-backed and concentrated among relatively stable income groups, which supports consistent repayment behaviour.
Borrowers tend to prioritise instalments, largely because the underlying property serves both as collateral and as a source of long-term housing security.

In the housing finance segment, non-performing loans (NPLs) in well-managed portfolios are typically below 5-10 per cent, reflecting comparatively stronger credit discipline.
"Regulatory policies also support growth, as banks with NPLs below 5.0 per cent are encouraged to expand lending. Overall, the sector reflects relatively healthy repayment performance with moderate risk," said Alamgir Hossain, managing director of Citizens Bank PLC, in an interview with The Financial Express (FE).
He said that home loans in the country offer clear benefits alongside inherent risks for both borrowers and lenders.
For customers, homeownership becomes accessible without requiring full upfront payment, particularly in the context of rising urban housing demand. Long tenures of 10 to 25 years help keep equated monthly instalments (EMIs) manageable, while potential property appreciation contributes to long-term wealth creation and financial security.
From the banking perspective, housing loans are secured by property collateral, which reduces credit risk compared to unsecured lending. They also generate stable, long-term interest income and support portfolio diversification.
"Retail housing finance is generally safer than large corporate lending. Banks are more comfortable extending credit to high-potential businessmen, multinational company employees, bankers, and non-resident Bangladeshis (NRBs), who typically demonstrate strong repayment capacity," the Managing Director said.
In Bangladesh, lenders -- including commercial banks and NBFIs -- evaluate several key factors before approving home loans.
The bank said income level and stability remain the most critical criteria, with applicants required to provide salary certificates, bank statements or tax returns. Typically, EMIs are capped at 40-50 per cent of monthly income, according to the Managing Director
"Employment status is also important, with salaried individuals in stable jobs generally preferred, while self-employed borrowers must demonstrate consistent income records".
Credit history, assessed through Credit Information Bureau (CIB) reports, plays a key role, as past defaults significantly reduce approval chances.
Age and loan tenure are considered to ensure repayment within working life, typically within the 25-65 age range at maturity. Property valuation and legal documentation are also crucial, with financing usually limited to 60-70 per cent of property value. Existing liabilities are reviewed as part of the overall risk assessment, the Managing Director added.