BHBFC seeks Tk11,000cr to support housing sector

The state-run Bangladesh House Building Finance Corporation (BHBFC) has sought Tk11,000 crore in loans from the government with a view to increasing investment in the housing sector affected by the Covid-19 outbreak.

The BHBFC has asked for Tk100 crore from the stimulus package and the remaining Tk1,000 from the government exchequer. 

The money will be used as the post-Covid-19 investment in the sector. To this end, the corporation has sent a letter to the Financial Institutions Division (FID) of the finance ministry, seeking approval for its action plan, chalked up considering the impact of Covid-19 on the housing sector. 

Under the plan, the corporation has adopted a five-year plan aimed at giving the housing sector a shot in the arm. The short-term initiatives under it will be implemented by the BHBFC from its funds. However, it needs Tk1,100 crore to execute medium and long term programmes. 

The action plan secured a seal of approval at the BHBFC's board meeting on May 4.

The BHBFC will give a 10 percent incentive on interest to regular clients in the medium term.  As such, it has asked for Tk100 crore from the government-announced bailout package. This incentive will be given on interest charged on loans which will remain regular between June 30, 2021 and June 30, 2022. 

Besides, in the case of pollima housing loan package and farmer housing loan package, the interest rate will be fixed at 5 percent for two years from 1 July 2020 to 30 June 2022, according to the proposed action plan sent to the FID on May 13. 

The corporation has sought Tk1,000 crore in loans from the government for the next five years – Tk200 crore each year to ensure credit flow for a long term.

The amount will be disbursed to all metropolitan cities and peri-urban areas, which will have a positive impact on the housing sector.

Debashish Chakraborty, managing director of BHBFC, referred to the plan as a series of customer-friendly measures geared to helping the housing sector overcome losses caused by the Covid-19 pandemic.

The action plan has been prepared to keep afloat industries involved with the housing sector and contribute to job creation by increasing credit flow at a significant rate every fiscal year.

Short-term initiatives 

No additional interest will be charged on the actual interest rate for non-payment of loan installments from April 1 to June 30 this year. 

In case of a rescheduling of any loan for a second time or more, the existing down payment rate will be further lowered by 5 percent, which will remain in force till December 31. 

Those who have applied for loan rescheduling by submitting partial down payment till last March will be given time till June 30 through a relaxation of the conditions on paying the remaining down payment within 90 days. 

The BHBFC has also proposed extending the time for the "zero equity" housing loan programme – undertaken on the occasion of the birth centenary of Bangabandhu Sheikh Mujibur Rahman – by one year more from June 2021. 

Liakat Ali Bhuiyan, first vice-president of REHAB, said that the implementation of BHBFC's action plan will have some positive impact on the housing sector.

However, the sector needs Tk20,000 crore for the long term to overcome massive losses it incurred because of coronavirus. In addition, plot and flat registration costs need to be reduced.

According to the annual report for the fiscal year ending on June 30, 2018, the total loans and advances the BHBHC disbursed amounted to Tk2,748 crore. Of the amount, the default loan was Tk236 crore.