The Financial Express

Govt to give Tk 4.0b for interest payment

Home loans for public servants

FE REPORT | Published: June 06, 2020 10:29:26 | Updated: June 07, 2020 20:29:33

Govt to give Tk 4.0b for interest payment

Amid the Covid-19 pandemic, the government is set to earmark Tk 4.0 billion for the next fiscal year to meet interest payment of home loan meant for public servants.

The government bears nearly 50-per cent interest of the loans sanctioned by commercial banks and financial institutions in favour of them.

The remaining interest is borne by an employee who takes out a home loan from a designated bank or financial institution.

This allocation is, however, equivalent to the amount allocated for the outgoing fiscal year.

An official familiar with the process at finance division said the government's burden reduced to some extent this year following introduction of single-digit interest rate in the banking system.

"We're now paying 4.0-per cent interest as subsidy to the loanees instead of 5.0 per cent earlier," he told the FE.

The official said actually, they had yet to utilise the amount allocated for this fiscal year.

On average, a public servant gets Tk 25,000 as subsidy from the government's end against his or her loan.

The home loan, introduced in August 2018, allows for as much as Tk 7.5 million.

An employee can borrow at least 2.0 million under the facility.

Under an order issued by finance division sometime in 2018, the employees are eligible for the facility.

Public servants can enjoy it after five years of regularisation of their jobs.

But an employee on deputation is not eligible for any loan.

However, people working at University Grants Commission and public universities have become eligible for the facility since December 2019.

The employees under the judicial services are also entitled to the scheme.

More than 2,000 public servants have so far taken home loans under the system.

Currently, state-owned commercial banks and Bangladesh House Building Finance Corporation are operating the loan system.


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