Vol. 5 Num 1114 Thu. July 19, 2007  

BB rolls out home loans at 10pc interest rate
Person with monthly income less than Tk 30,000 to get Tk15 lakh

The Bangladesh Bank (BB) yesterday introduced a housing scheme to offer loans at highest 10 percent interest rate for low and middle-income people in urban areas.

A person with a monthly income less than Tk 30,000 will be eligible to receive a maximum of Tk15 lakh loan from commercial banks and financial institutions to buy or construct an apartment of highest 1,250 square feet, according to a central bank circular.

The central bank sent the circular yesterday to all commercial banks and financial institutions.

The total amount of the three-year project is Tk 300 crore. The BB will channel Tk 100 crore each year in the next three years to the housing scheme.

The interest rate for the housing scheme will be the lowest-ever in the country. Now, the interest rates of home loan schemes offered by commercial banks and financial institutions range between 14 percent and 18 percent.

Replying to a query, BB Governor Dr Salehuddin Ahmed said the central bank will review whether the loan amounts offered by the scheme will be enough to buy flats in urban areas.

"If necessary, the central bank will increase loan amounts for the borrowers," Salehuddin added.

The circular also said the borrowers will be able to repay loans in 20 years through monthly instalments.

The BB will give the money to commercial banks and financial institutions for disbursing as loans under the scheme titled 'Reinvestment Scheme in Housing Sector.'

As per the circular, the borrower can utilise the money for buying or constructing apartments in six city corporation areas and municipal areas of Tongi, Gazipur, Savar and Narayanganj.

However, people working with companies, which have housing loan scheme for their employees, will not get the loan. Besides, the loan is only for those who or their relations (wife/husband and children) do not own any house or apartment in the designated areas.

If a person has already taken housing loans from a bank or financial institution will also not be considered under the scheme.

BB will give 75 percent of the loan and rest 25 percent will have to be given by the banks concerned, the circular said.

The BB will give the money to the commercial banks and financial institutions at only 5 percent interest rate.

The circular said only the banks or financial institutions whose volume of classified loan is less than 10 percent of the total outstanding loans will get the central bank money for distribution.

The loan providers as per their own rules and regulations will handle all activities including selecting eligible customer, documentations, debt- equity ratios and recovery monitoring.

A source in the BB said the scheme is especially designed for low and middle income people who have very limited scope to get loans from existing schemes.

"We have estimated the monthly instalment against the loan will be not more than of a service holder's monthly house rent allowance," the source said.