The government may not provide interest subsidies on additional loans taken out by civil servants for the construction or purchase of homes, according to Finance Division officials.
An initial decision was taken in this regard on December 4, during a meeting between the Finance Division and heads of local commercial banks.
Currently, public servants can avail a maximum of Tk1.2 lakh in loans at 10% interest for residential purposes. This should be equivalent to 36 months’ basic pay for a government employee, but cannot be more than Tk1.2 lakh.
Earlier, a report submitted by two committees of the Finance Division recommended raising the loan ceiling to Tk10 lakh for employees at the district and rural levels, and to Tk80 lakh for those living in Dhaka and other cities.
Also Read - Govt report proposes 3.5% interest subsidy on home loan for civil servants
It also suggested that the government provide an annual interest subsidy of Tk700 crore to Tk980 crore on home loan allocations. Of the subsidies, 3% would be borne by the government, while borrowers would have to repay the rest.
The report has already been submitted to the Finance Division, and a summary will soon be placed at a cabinet meeting for its approval, officials said.
According to the Finance Division, there are currently 477,000 first class officers, 131,000 second class, 1.228 million third class and 267,000 fourth class employees in the country.
Unified loan payment system
Officials said the interest rate on home loans for government employees will not be higher than 8%, as the government has decided to launch a unified loan payment system.
Also Read - Civil servant home loan initiative delayed
On December 12, the officials concerned held a meeting at the Finance Division auditorium to discuss and finalize facilities to be provided by banks for repayment of the loans.
It was decided in the meeting that market interest rates would be applicable to additional loans. Public and private banks will be selected by a board based on their performance and services to the government staff on a yearly basis.
The Housing Finance Board will work under the Finance Division. A website will be launched, through which civil servants can apply for home loans.