There has been a record disbursement of loans in one month when House Building Finance Corporation (HBFC) provided loans over Rs 275 million in September this year. The new HBFC chief, B H Qureshi, told Business Recorder that all previous records had been smashed in one-month period and the loaning programme was now getting momentum all over the country.
He said that the debt-equity ratio of HBFC also ranges between 80:20 and 85:15. He said that this is also the policy of the government to attract more borrowers.
He said that 12 zonal offices were working under the HBFC including 60 district offices. Loaning activities have been stepped up in all zonal and district offices. A new district office has been established at Naushahro Feroze, he added.
A new office has also been set up in Gilgit, he said. Qureshi said that this sector has enormous potential for poverty reduction and employment generation. The government has taken various steps to improve the environment for investment in this sector.
These measures include improvement in the availability of housing finance by encouraging commercial banks to extend housing finance; interest rate reduction from 17-18 percent to 7.5 to 8.5 percent; legal frame work for the loan recovery of financial institution streamlined; enhanced bank's exposure to housing finance from 5 percent to 10 percent of net advances.
The maximum housing loan per party limit has been increased from Rs 5 million to Rs 10 million and debt-equity increased from 70:30 to 85:15.
Pakistan Steel has been permitted to import billets and the duty has been reduced to 10 percent from 20 percent.
The maximum loan tenure for housing finance has been increased from 15 years to 20 years and maximum limit of lending for HBFC has been increased from Rs 20 million to Rs 50 million. Banks and DFIs are extending credit facilities for Balancing, Modernisation and Replacement (BMR) of machinery used for housing and construction industry.
Banks have been allowed to deduct up to 3 percent of the income arising out of consumer loans for creation of reserve to offset bad debts in this segment.
HBFC has introduced bridge financing and bulk financing for housing projects through escrow accounting together with appropriate safeguard. House Building Finance Corporation and other financial institutions have formulated packages of preferential/concessional rates with affordable system of instalments for repayment to provide affordable credit to low income groups.