As Bangladesh's cities expand and homeownership becomes attainable for more people, the housing finance sector is poised for new opportunities.
Capturing the untapped potentials, NRBC Bank PLC is helping individuals and families realise their dreams through responsible, inclusive, and future-focused financing.
In an exclusive interview with The Financial Express (FE), Dr. Md. Touhidul Alam Khan, Managing Director & CEO of NRBC Bank PLC, outlined the bank's dedication to sustainable growth, support for diverse borrower groups, and its role in confidently shaping the future of home loans in Bangladesh.
Regarding the current status of the home loan sector in Bangladesh, he said the sector shows mixed dynamics.
It has grown steadily over the last decade, driven by rapid urbanisation, a rising middle class, and stronger demand for urban housing, with the total outstanding housing loan book around between Tk 1.2 trillion and Tk1.3 trillion.
Yet mortgage penetration relative to GDP remains low versus other developing countries, indicating considerable room for growth. Banks lead the market due to their stability and structured lending, he observed.
Dr, Khan said though growth has slowed recently due mainly to rising NPLs (non-performing loans), higher interest rates, a cooling real estate market, and tighter regulation.
Though non-banking financial institutions (NBFIs) contribute, banks are the key providers of housing finance in the country.
About the key factors that are being largely considered before approving home loans, the seasoned banker said approval hinges largely on risk assessments and repayment capacity.
Stable income remains a key deciding factor for sanctioning housing loans, he mentioned, adding that salaried employees are preferred, while business owners need to show two to three years of steady earnings.
A clean CIB (Credit Information Bureau) report is essential, and any defaults can lead to rejection, according to him.
Dr, Khan said the lenders thoroughly monitor Debt-to-Income ratios, typically keeping total monthly obligations within 40-50 per cent of income.
The property must satisfy legal and technical checks as banks usually finance in between 70 per cent and 80 per cent of the assessed value, with borrowers covering 20 per cent to 30 per cent as down payment.
Age, employment type, savings habits, and complete documentations (TIN, bank statements, property papers) are also important.
Talking about the groups or professions who are currently taking home loans the most, the experienced banker said borrowers are diverse. Salaried professionals -- corporate staff, bankers, government employees, and NGO workers -- make up the largest group because of predictable incomes.
SME (small and medium enterprises) owners and self-employed professionals (doctors, engineers) also participate when they can document steady income. Demand for home loans is rising among NRBs (non-resident Bangladeshis) and remittance earners, especially from the Middle East and Europe, he mentioned.
Landlords with rental incomes and an increasing number of digital freelancers are also entering the market, provided they are able to provide verifiable financial records.
Responding to a question regarding the repayment performance of the loan receivers, the experienced banker said home loans are among the most stable banking portfolios, with much lower default rates than corporate or SME lending.
Borrowers typically prioritise housing payments, long tenures (10-25 years) and making EMIs manageable when income falls within recommended thresholds. Repayment behaviour is strong especially in major cities like Dhaka and Chattogram, where incomes tend to be more stable, he said.
Explaining the home loan process from application to repayment, he said the process starts with the borrower assessing affordability and submitting an application with required documents (NID, income proofs, tax returns, property information), he noted.
The bank runs a CIB check and carries out legal and technical property verification to confirm ownership and compliance, said Dr. Khan.
If criteria are fulfilled, a sanction letter is issued with loan amount, rate, and repayment terms.
After signing the mortgage agreement, he said, funds are disbursed -- usually to the seller or developer, according to the senior banker.
Repayment is made via EMIs, often auto-debited, he said.
Loans overdue by more than 90 days are classified as non-performing, which can trigger legal action and potential auction of the property. Once repaid in full, the bank issues an NOC and releases the mortgage.
In terms of benefits and risks of home loans for both borrowers and lenders, Dr. Khan said for borrowers, home loans enable ownership without full upfront payment, allow building a long-term asset, and real estate often appreciates, offering inflation protection.
He said risks include a long-term financial commitment that reduces flexibility, higher EMIs if rates rise, and the danger of losing the property if income is disrupted.
For banks, housing loans are attractive due to stability and collateral-backed, long-term returns, but they also pose challenges like liquidity mismatch (funding long-term loans with short-term deposits) and recovery risks during economic downturns or when property ownership issues arise, according to him.
Overall, housing finance is vital but requires careful risk management for both lenders and borrowers.
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