Resumption of loan sanction by House Building Finance Corporation (HBFC) is unlikely before its transformation into Bangladesh Housing Bank

An initiative to reorganise the Corporation into a Housing Bank is awaiting the new gov ernments attention. A separate law will have to be en acted for reorganisation of HBFC

The Corporation has suspended its new loan sanction: due to fund shortage. It has no fund of Its own. Funds are raised through borrowings from Bangladesh Bank. Jiban Bima Corporation and commercial banks HBFC can not Isrrrow more than ten limes of its paid up capital. Its paid up capital is Taka 10 crores. It has already borrowed Taka 1250 crores.

The World Bank pointed out some trregulartlles tn financial operations of the Corporation, exceeding its borrowing limits, tn 1987-88. Since then, reor ganisatton proposals for HBFC have been under consideration while new fund flows to the Corporation by way of debenture finance by the central bank and other institutions haw frozen

The government formed a committee to investigate into the affairs of HBFC tn 1988 with Deputy Governor of Bangladesh Bank as its Chairman The committee reported mishmash tn the Corporation. Bangladesh Bank refused to give loans any more. Other banks refused to purchase debenture. Fund flows to tlic Corporation were thus disrupted. forcing It to suspend new loun sanctions. A total of 9.184 loan applications are now pending with the Corporation.

HBFC provided so far loans in three categories :

I) Multi loan — Maximum amount Taka eight lakh with its annual rate of irtterest al

10.5 ^r cent and repayment

II) Generaftom — Maximum amount Taka six lakh with Ite annual Interest rate 13 per cent for upto Taka four lakh and 16 per cent for the remaining Taka two lakh

Hl) Upazlla loan — It started tn 1982 It was sanctioned to the people living within one mile radius from upazlla headquarters. Rate of interest for upazlla loan was five per cent and repayment period was 30 years.

The loan provided by HBFC was not however enough for completing construction The Corporation sanctioned Taka 236 per aquare feet while construction rate in market, approved by Ministry of Works.

was Taka 500 per square feet As a result the loanees had to go to other banks for additional funds against second mortgage with a no objection certificate from HBFC.

The HBFC. established tn 1952 and recast in 1973. re-< ctved so far a total of 73.533 loan appheationa. Of them 21.455 were for multi loans 46.239 for general loans, and 5.839 for upazlla loans. The Corporation sanctioned 11.154 cases for multi loans. 34.157 for general loans, and 2.634 for upazlla loam.

Taka 651.78 crore were sanctioned for multi loans, Taka 536.7 T crore for genera) loans, and Taka 74.07 crore for upazila loans. A total of 83 131 houses were built with

funding support of the HBFC under the three categories of Irwins.

The latest annual report (I9H9-90) of Bangladesh Bank •liowed that HBFC. since Its iim cptlon. sanctioned a total of Taka 1.262.50 crore under various categories of loans for 83.131 housing units upto June. 1990 Cumulative disbursements against sanctioned loans totalled Taka 1156.55 crore.

Loans recoveries by the Corporation amounted to Taka 90.70 crore in 1989-90 against Taka 70.55 crore in 1988-89 Total outstanding loans (inclusive of interest charges) stood' at Taka 1398.30 crore on June 30. 1969. Overdue loam amounted

to Toto 201 crore .bom 14-4 Km an June 30 1090

Abdul Hye tortor General Managrr^of HBFC sold Ihr pn>-to capital’ through sMe SZ* •hares Apart from thia M Ml receive funds from World Hank and Aslan Development Bank He said the amount of loam offered by the proposed bank, will not be limited to Taka eight lakh but M will gs for loan sanctiona upto Taka 25 lakh

He said whereas the arlM-ties of HBFC were limited within major towns, the hrais Ing bank will extend foam even to villagers for construe lion of their tln-sheds. It wifi also give loans for construction activities in the sector commercial purposes, the HBFC General Manager said

Ihc offices of Housing Bank will be expanded to as down as upazlla level whereas the of flees of HBFC are now located not beyond 19 former district headquarters