According to the circular, a client is now entitled to getting Tk80 lakh more than the previous limit of credit for purchase of a flat or apartment
Bangladesh Bank (BB) on Tuesday raised the ceiling of credit for house financing to Tk2.0 crore from Tk1.2 crore with a 70:30 debt-equity ratio for clients per case.
The BB's Banking Regulations and Policy Department (BRPD) has issued a circular asking banks to follow the latest instruction with immediate effect.
According to the circular, a client is now entitled to getting Tk80 lakh more than the previous limit of credit for purchase of a flat or apartment.
Talking to Dhaka Tribune, Deputy General Manager of BRPD AKM Ehsan said that the credit ceiling for house financing would remain same for all the cities across the country, irrespective of major cities like Dhaka and Chittagong.
"It is for the lending bank to set to what extent (of the ceiling) it would finance a client after assessing the borrowing proposal and the collateral," he said.
In the circular, the BRPD said that the change came from considering the price hike of construction materials for housing/real estate and in the context of growing higher middle class, rising per capita income and increasing demand for housing.
Liakat Ali Bhuiyan, vice president of Real Estate and Housing Association of Bangladesh, said the BB's new instruction would impact the real estate industry positively.
"I am aware of BB's new instruction on banks. It reflects our demand. It will impact the industry (housing) positively," he said.
According to him, the REHAB's member companies together have some 8,000-10,000 flats/ apartments unsold.
"Increased bank loan will create some new clients. It will help selling some of the flats/apartments," he added.
Meanwhile, the ceiling of housing credit per party was first introduced in 2004, when a client had a maximum entitlement of Tk 75 lakh with a debt-equity ratio of 80:20.