BHBFC seeks govt nod to cut flat loan interest rate to 9.0pc

Syful Islam | Published: August 15, 2018 09:53:47 | Updated: August 16, 2018 20:34:50

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The Bangladesh House Building Finance Corporation (BHBFC) has sought the government's approval to reduce the interest rate on flat purchase loans to 9.0 per cent, officials said.

Presently, the rate of interest on this segment of loans is 10 per cent which, the corporation thinks, has a scope to be lowered further.

In a recent letter to the Ministry of Finance (MoF), BHBFC managing director Debasish Chakrabarty wrote that the interest rates on various loans were revised last in July, 2017.

In the last review, the interest rate on flat purchase loan was fixed at 10 per cent from 12 per cent for all the metropolitan, divisional, and district areas in Dhaka and Chattogram.

He wrote that though the interest rate was cut by 2.0 per cent in July last year, the effective interest rate remained unchanged.

"Since the borrowers are lower middle and middle class people, there is a scope to further cut the interest rate to help them have their own houses," Mr Chakrabarty wrote.

Besides, he noted that there was a government directive to cut the loan interest rate to a single digit.

The BHBFC board of directors early this month approved the proposed interest rate cut and asked the management to forward the issue to the ministry for getting its clearance.

When contacted, a senior official at the Financial Institutions Division told the FE that the ministry was scrutinising the proposal.

"We will make a decision on this issue soon," the official said.

For the current fiscal year, the corporation set the loan disbursement target at Tk 6.0 billion, up by Tk 2.0 billion from that the previous fiscal year.

Apart from providing loans from its own fund, the BHBFC will also act as an implementing agency of home loans for government employees this year. So, disbursement of home loans will increase significantly this year, according to officials.

The corporation is set to get Euro 31.23 million from the Islamic Development Bank (IDB) this fiscal to provide home loans to middle and lower income people.

The BHBFC will receive a total of Euro 94.75 million from the IDB in three phases under the Rural and Peri-urban Housing Finance project.

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