The state-owned Bangladesh House Building Finance Corporation (BHBFC) has taken a move to reduce interest rates on its general housing loan and the housing loan for farmers.
The only state-owned specialised financial institution approved proposals to lower the lending rates at its board meeting last week.
"After approval of the proposals by the BHBFC board to cut the interest rates, the board sent them to the finance ministry for its nod," a high official of the BHBFC told the FE.
The BHBFC sought to set the interest rate at 8.5 per cent on housing loans in Dhaka and Chattogram metropolitan areas and 8.0 per cent for areas outside the two metropolises.
Besides, the BHBFC board meeting also sent a proposal to lower the lending rate on the 'housing loan for farmers' to 7.0 per cent from the existing 8.0 per cent.
The current rate of interest on housing loans is 9.0 per cent for Dhaka and Chattogram metropolitan areas and 8.5 per cent for divisional, district, peri-urban and growth centre areas, according to the BHBFC.
On the other hand, the rate of interest on flat purchase loans is 9.0 per cent for all metropolitan, divisional and district areas of Dhaka and Chattogram.
The BHBFC also made a proposal in the meeting to double its housing loan ceiling to Tk 20 million (2.0 crore) from the existing Tk 10 million considering the increased construction cost and attracting more people to its housing loans.
Earlier in 2017 it raised the ceiling from Tk 5.0 million to Tk 10 million for the borrowers in Dhaka and Chattogram cities.
It also adopted a proposal to raise the ceiling of its flat purchase loan from the existing Tk 8.0 million to Tk 10.2 million.
BHBFC Managing Director Debashish Chakrabarty told the FE that the board took the decision to reduce lending rates in a response to a considerable number of appeals from loan seekers to that effect and in a bid to ease the loan disbursement process.
"Land for housing is shrinking and people in and outside metropolitan areas sometimes do not want to hand over their land to developers for commercial housing, and the efforts to reduce the lending rate are part of the bid to support them."
He gave the same reasoning in the event of loans for farmers. It would help save farm land of the country and ensure more housing facilities for the farmers, he added.
The new lending rates would be effective by next month or very shortly after an approval from the finance ministry, the official added.
© 2017 - All Rights with The Financial Express