Finance Minster AMA Muhith has given consent on Tk500 crore fund supply to Bangladesh House Building Finance Corporation (HBFC) to expand easy home loan facility in rural areas.
He singed a summary on Thursday on the financial support from the government’s budget allocation of this fiscal year to the state-run body, said finance division sources.
A HBFC official said the potential borrowers had already started lobbying and using political influence to get the loan given on easy terms.
But it sparked a fear that the target people who are comparatively much needy might miss the credit facility if such use of political influence continued, he said.
The corporation set Tk400 crore as target to disburse in this fiscal year. Unless the government provided the fund, the target would be failed, the finance ministry summary statement said.
Besides, the lender has taken an initiative to amend the existing HBFC law to achieve financial viability within next couple of years so that it could be run like a commercial bank.
“Earlier, it was not possible for the government to fund the corporation due to shortage of budget allocation. But this is one of good state-owned companies which give returns at the end of the day,” a finance division official clarified.
He said the state-owned commercial banks like Sonali, Janata, Agrani, Rupali and BASIC didn’t give any return to the government exchequer from their trading gain in local stock exchanges.
According to the finance minister summary, the finance division will provide the Tk500 crore fund at a 3% interest rate and to be disbursed in three instalments during three consecutive fiscal years.
In first two years, the corporation will receive Tk400 crore and then Tk100 crore in the final year, the summary said.
Earlier, the finance division provided the corporation with Tk300 crore loan in four instalments during 2009-2013 period.
The government will provide 4% subsidy to HBFC investment on interest rate and 6% subsidy on loans to non-municipality and rural areas at an interest rate of 10%.
HBFC provides house-building loans in the capital Dhaka and Chittagong city at 12% interest rate as it gets fund from government at 9%.
While the HBFC targets Tk400 crore loan disbursement in this fiscal, it also aims to provide Tk543.89 crore to the government exchequer as income tax and debenture expenditure during the year.
HBFC default loans dropped 5.92% in last fiscal year and the recovery rate was 86.64%. It made a net profit of Tk185 crore in the year.