Real Estate and Housing Association of Bangladesh (REHAB) claims that they are also working towards ensuring affordable apartments for all. What are the differences between the initiatives taken by BHBFC and REHAB?
REHAB [a platform of realtors] focuses on profit maximisation, but our objective is to ensure housing facilities for all at lower costs. While they [realtors] tend to concentrate in Dhaka, our target is to provide low-cost housing facilities to the people living outside urban areas.
Since real estate companies are concentrated in urban areas, we are increasingly focusing on rural areas. This is why our interest rates for Dhaka and Chittagong cities are higher than those for rural areas. We will reduce the rates further.
How can the process of handing flats over to buyers be accelerated?
Generally, realtors take three to five years’ time to hand over a flat to its buyer. They should come out of this mindset and concentrate on a first-track construction method.
Also, we talked to the REHAB about technology and equipment needed to expedite the construction process so flats and projects can be handed over to their owners within the stipulated time.
We have decided to send a team to Malaysia to gain expertise in the handling of advanced construction technology and equipment. Some of the REHAB members may join the team.
While some banks offer home loans at 8.5%, why are the people opting for BHBFC loans?
People have trust in us as there are no hidden charges. This is because buyers prefer our offers to bank loans.
Home loans from banks and non-banking financial institutions are available only in Dhaka and Chittagong. But, the government’s vision is to ensure housing facilities for all by 2021. Over 80% of the total population live in rural areas and we have to make housing facilities available in the areas as well in order to materialise Vision 2021.
Our competitors are doing well. The corporation could not duly perform its duties. We have, however, taken lots of initiatives including building new apartments and reducing interest rates.
What measures have you taken to provide low-cost housing facilities beyond Dhaka and Chittagong metropolises?
If you look around Dhaka city, you will find that the land for housing is decreasing day by day due to the rapid influx of people. This is because our emphasis is on building houses in rural areas.
For Dhaka and Chittagong cities, we have reduced interest rate to 9.5% from 12%, while the rate is 8.5% for other parts of the country, especially at the district level.
Moreover, Islamic Development Bank (IDB) has recently announced a $95.24m loan for a rural and peri-urban housing finance project in Bangladesh.
We will disburse the loan only among borrowers living outside Dhaka and Chittagong metropolises for construction of multi-storey residential buildings. Under the project, a total of 1,046 buildings will be constructed to accommodate some 47,856 people. The loan will be disbursed under the “Pallima” scheme, a newly launched scheme under which one could borrow a maximum of Tk60 lakh with an 8.5% interest rate.
We came to know that BHBFC has never suffered any loss since its inception in 1952. Would you tell us about its current performance?
In the last fiscal, BHBFC disbursed Tk353 crore. Of the amount, 67% was given to people living outside Dhaka and Chittagong. We are set to disburse Tk400 crore this fiscal year. After getting the IDB credit, we set a target to disburse around Tk1,400-1,600 crore in the next two years.
We have so far given loans for construction of 200,000 housing units, earning the BHBFC a Tk166 crore profit in the last fiscal year.
Tell us something about the loan recovery rate
Our loan recovery rate is very good. It was 93% in the last year. We have inked a deal with Standard Chartered Bank to make instalment payments even easier and more customer-friendly. Under the new system, the payments can be deposited through Electronic Fund Transfer, and Standard Chartered Bank will work as mediator. Client will get a text message in his or her phone right away after the fund is deducted from their accounts.
What types of loan package do you offer now?
We are offering four packages: Home Loan for Expatriate Bangladeshis, Rural House Loans, House Development Loan, and House Repair Loan. Also, we intend to introduce a new package under the name “Farmer’s Home Loan.”
Which package is in high demand?
Among them, the Home Loan for Expatriate package is in high demand as most of the expatriates have both land and cash in their hand.
As the money and land do not always suffice to purchase a flat or to construct a building, the loans largely help them maximise their remittances that, in turn, help them either in their primary investment or in instalment payment.
Given all these aspects, we have labelled the package “Probash Bondhu” under which a borrower can get a loan at a 9% interest rate with a repayment tenure of 25 years, and we will provide 70% of the total cost and the rest has to be arranged by the client himself.
What difficulties are you facing in managing the corporation?
The problems I face include small human resources and lack of adequate branches to render services to clients. To resolve the problems, we have sent a proposal to the ministry concerned and are hopeful that it will soon approve the proposal.
There are only 29 branches across the country. Of them, 14 are in Dhaka. There will be 71 more branches if the ministry approves the proposal.
What are your plans for the organisation? Where do you want to see it in the future?
As I mentioned earlier, realtors are focusing on making their own profits. We want to construct flats so apartment prices go down further. If the government gives us khas land, we will construct buildings there and sell the people flats at lower prices.
Getting a building design approved is a very complicated task. Many do not know how to get a design approved and by whom. In this connection, we are planning to introduce a low-cost-and-time consuming mechanism as used in the developed world. We talked to people who are using the Kotoko system [an advanced construction mechanism]. We are planning to launch banking services.
Clients often say they face lots of hurdles when applying for home loans. What steps are you taking to simplify the process?
Clients face hassles because many of them do not properly know how to apply for a home loan and what documents they need to submit.
We are taking several initiatives to help them in the process. We have, for instance, prepared a checklist of loan application documents, which is available on our website as well as Facebook page.
To disseminate information about our services and advanced housing technologies, the BHBFC will organise its first ever “Housing Financing Fair 2017” at Hotel Sonargaon in Dhaka from October 19-21.