House Building Finance Corporation Limited (HBFCL) is going to introduce "Golden Handshake Scheme" (GHS) for its employees within next two months to address the overstaffing issue being confronted by the corporation. Talking to Business Recorder after a press briefing, Azhar Abbas Jafferi, Managing Director, HBFCL, said that the corporation is currently confronting with overstaffing issue.
He further said the Canadian Mortgage Company has recommended the corporation to cut 50 percent jobs to overcome the overstaffing issue. He informed that the corporation would initially give an opportunity to some 350 employees to avail the GHS, which is around 25 percent of the total employment. He added that the scheme is expected to be launched within eight weeks, as the final list of the employees has been sent to the consultants.
Earlier, in a press briefing, Azhar said the HBFCL is the only financial institution in Pakistan, which has been financing the housing needs of the low and middle-income people of the country for the last 58 years. Despite having poor law and order situation and risky business environment, the corporation has been able to perform and produce satisfactory results.
He appraised that the HBFCL has managed to bring down the losses to mere Rs 28.36 million in 2009 as compared to Rs 385.55 million in 2008, which is a major achievement of the new management. He said the total lending was around Rs 750 million in 2009, as HBFCL's liquidity position has been severely affected in the last many years by the rising non-performing loans (NPLs), which are 41 percent of the total portfolio as compared to an average 2-3 percent of the other banks. Therefore, it was imperative that loans should be sanctioned very prudently.
He said the major cause of default is that while lending to the borrowers in the past their repayment capacity was not given due weightage and the corporation did not emphasis on recovery of loans; ineffective foreclose laws; and in some cases the genuine problem of the borrowers owing to the high inflation in the country.
According to the second quarter report of SBP, the total mortgage outstanding principal of all the banks decreased by 11 percent to Rs 74 billion as compared to Rs 84 billion in 2008. Similarly, the total number of borrowers also declined by 8.5 percent to 112,785 as compared to 123,100 as on December 31, 2008. Azhar further said that any reduction in interest rate and inflation in the economy would fundamentally improve the economy in general and especially the real estate sector.
He informed that the corporation has evolved a comprehensive credit policy for retail, builder sponsored cases and corporate lending in accordance with the SBP regulations and the best industry practices, which would help in prudent lending. He said the process of income estimation, title verification and valuation of properties have now been outsourced to maintain transparency and minimise the credit and fraud losses.
He said the corporation has recovered Rs 3.5 billion in 2009, which is some 10 percent higher against the target of Rs 3.32 billion. He further said the liquidity position of the organisation has substantially improved, because of excellent treasury management, which would help to enhance the disbursement targets of 2010 and added the corporation would continue the strategy, adopted last year, in 2010.
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