A torrid time for BHBFC

Badrul Ahsan | Published: May 06, 2015 00:00:00 | Updated: May 06, 2015 00:11:31

Bangladesh House Building Finance Corporation (BHBFC) is now passing a torrid time to disburse approved loans among clients as it has been facing an acute shortage of funds, a high official said.
According to the official data, nearly 1.5 billion worth of approved loans are lying with BHBFC for disbursement among clients.
Besides, 511 applications submitted for house building loans worth Tk 1.55 billion are in queue with the office for approval.
Preferring anonymity, a BHBFC official said the office has held up further meeting on loan approval for long due to the same reason.
BHBFC has already applied for Tk 5.0 billion to the government and Tk 5.0 billion to the central bank from its refinancing fund to carry out its financing activities, but the office is yet to get any green signal from neither of the authorities.
Due to liquidity crisis, the house building financer has even stopped receiving new applications for loans for the last three months.
BHBFC Managing Director Dr Md Nurul Alam Talukder said the corporation is facing fund crisis as neither the government has approved any new fund nor any state-owned commercial bank bought debenture from the office in last five years.
"Whatever funds we are collecting from the market against loans, we are disbursing those among new clients. It is insufficient against demand," he added.
BHBFC usually carries out its financing activities by collecting funds from the government at 2 or 3 per cent of interest or selling debentures to the state-owned commercial banks (SCBs) at 8 per cent of interest.
"But neither the government has allocated any new fund for the corporation nor the SCBs bought any low-cost debenture from BHBFC in the last five years which has worsened the financial condition of the corporation," Talukder added.
The managing director, however, said he is expecting a positive response from the government in a meeting to be held with the government high-ups soon. Â
"If we get positive response from the government and the central bank, I hope the office will be able to overcome the financial crisis,' he added.
Md Abdul Awal, who has applied for loan with BHBFC, said he has contacted a number of private banks, but their rate of interest is almost 6 to 8 per cent higher than that of the corporation.
"It will not be possible for me to build a house by taking loans at an interest of 18 to 20 per cent. So, I have come to BHBFC office for low-cost fund, but the corporation officials cannot satisfy my needs," he added.
BHBFC started its journey in 1973 with a paid-up capital of Tk 1.0 billion which still remains the same.
It provides low-cost loans for building houses and buying flats at an interest of 12 per cent in Dhaka and Chittagong cities while 10 per cent elsewhere in the county.
The corporation takes decision on any application for loan within 30 days from its submission.
Due to fund crisis, loan disbursement by the corporation has been gradually decreasing for the last three years. Loan approval by the corporation in the last financial year dropped by around 47 per cent, data showed.
According to the official data, BHBFC has approved loans worth Tk 2.85 billion in the last fiscal year (2013-14) against approval of Tk 5.34 billion in the corresponding period.
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