75 AIUB Journal of Business & Economics, Vol.

7(2), Aug 2008

AIUB Journal of Business and Economics

Volume 7, Number 2
ISSN 1683-8742
August 2008: pp. 75-93

Real Estate Financing in Bangladesh:

Problems, Programs, and Prospects

Md. Maksudur Rahman Sarker*

Mohammad Moniruzzaman Siddiquee**
Sheikh Feroze Rehan†

Abstract

Housing not only provides physical shelter but also have significant impact on the lives of the dwellers in terms of
skills enhancement, income generation, increased security, health, self confidence and human dignity. Considerable
research interest is attached to the question of how the acquisition of residential real estate has been financed.
Bangladesh, like many other developing countries face an acute shortage of affordable housing both in the urban
and rural areas. The main constraints in housing production are the unavailability and high cost of housing finance
in relation to household incomes. The present housing finance system in Bangladesh is extremely small and highly
segmented. Besides the state-owned BHBFC, other sources of housing finance currently available in Bangladesh
are commercial banks, employee loans, life insurance policies, informal means (such as own savings, contributions
from relatives, friends or employers, or short-term money-lenders), and housing co -operatives in the rural sector.
Recently, private housing finance institutions (such as Delta-BRAC Housing Finan ce Corporation Ltd. and the
National Housing Finance and Investment Ltd.) and non-bank financial institutions (such as IDLC of Bangladesh
and MIDAS Financing Ltd.) have started to operate in this market targeting middle income households. Several
microfinance institutions (such as Grameen Bank, Proshika, BRAC, and ASA) have extended non-collateralized
credit to a small proportion of poor rural households. The performance of all the sources is not up to the mark as a
whole. The government has to assess and decide on a number housing financing policies to improve the national
housing situation, such as introducing a National Home Lending Program (NHLP); redirecting housing subsidies;
increasing lending recovery rates by BHBFC; expanding the primary mortgage market; rehabilitating BHBFC;
adopting a legal and regulatory reform program to safeguard lenders; enhancing lending in rural areas through
village micro-credit schemes; and improving the climate for attracting finance to the housing sector.

* Dept. of Accounting & IS, University of Dhaka, and American International University-Bangladesh.
**Department of Business Administration, Jahangirnagar University, Dhaka.
†Department of Business Administration, Daffodil International University, Dhaka.
76 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

Introduction

Beyond providing physical shelter, housing may have significant impact on the lives of the dwellers in terms of
skills enhancement, income generation, increased security, health, self-confidence and human dignity. Nordberg
(2000) has clearly demonstrated that in most regions, housing has the potential of becoming an engine of
economic growth because of its high yield on invested resources, a high multiplier effect, and a host of beneficial
forward and backward linkages in the economy. Both the Constitution of the People’s Republic of Bangladesh
and the UN Declaration on Fundamental Rights recognized shelter as one of the fundamental human rights. The
National Housing Policy (NHP) 1993 commits the government to take initiatives in housing as a provider, for
weaker section of the people and as a facilitator in all housing initiatives in Bangladesh.

Nevertheless, making shelter available to all is increasingly becoming a significant challenge in Bangladesh. With a
large population of 123.1 million, Bangladesh is a densely populated country in the world. The economic
development is far from satisfaction and the GNP per capita is US$ 363. Moreover, a large portion of the
population lives below the poverty line and are deprived of habitable shelter along with other basic services.
Bangladesh, like many other developing countries face an acute shortage of affordable housing both in the urban
and rural areas. The housing shortage was estimated in 1991 to be 3.10 million units out of which 2015 million
units in rural areas and 0.95 million units in urban areas. The shortage was estimated to be 5.0 million by the end
of the year 2000 (National Housing Authority, 2004).

Rationale of the Study

Access to housing finance is a critical bottleneck for the majority of the population in developing countries. The
lack of available and accessible housing finance has been identified by the Government of
Bangladesh (GOB) as one of the important hurdles in improving the housing conditions for middle and lower
income households (Hoek-Smit, 1998). Although several potential sources of housing finance for mid- and high-
income consumers exist, most of the low-income families’ needs are still unmet.

Government subsidies tend to be insufficient or inappropriate; mortgage markets tend to serve only the richest
10-20 per cent of the population; in spite of its strong value proposition, housing microfinance is still an emerging
industry; and informal systems are not efficient. Only 3 per cent of outstanding credit in low income countries is
held in the form of housing loans compared to 27 per cent in high-income countries (de Soto, 2003).

Still the availability of housing finance is crucial for overall economic development as well as for a household’s
welfare and its quality of life (Nadler, 2006). According to the Housing Finance Group of the International
Finance Corporation (IFC), housing finance contributes to social stability by enabling households to purchase an
asset which will represent their largest single investment. Personal residences account for 75 to 90 per cent of
household wealth in emerging market countries, which amounts to 3 to 6 times their annual income. Furthermore,
77 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

housing represents 15 to 40 per cent of the monthly expenditure of households worldwide. Globally Investment
in the housing sector accounts for 15-35 per cent of aggregate investment (Housing Finance Group, 2006).

Before we turn our attention to the housing finance system, we would like to briefly analyze the present housing
conditions and requirements for Bangladesh and the ways housing is produced and supplied.

Globally, urbanization is an outcome of both population growth and rural-urban population migration.
Bangladesh is of no exception. The current trend of urban growth in Bangladesh is about 5-6 per cent per annum.
At present 28 per cent of Bangladesh’s population live in urban areas, which will be 34 per cent by the year 2025
(REHAB, 2003). Dhaka, with a total population of 10 million, is now the 22nd largest city in the world. By the year
2015 Dhaka is projected to rank as the 5th largest city in the world, where 19 million people will have to find their
house. Statistics show that Bangladesh will need to construct approximately 4 million new houses annually to meet
the future demand of the next 20 years. Estimates for annual requirements for housing in urban areas vary from
0.3 million to 0.55 million units (CPD, 2003).

Recent information concerning investment in the housing sector shows steady growth both in absolute terms and
as a percentage of total private investment and GDP. Private investment in housing and construction has more
than doubled during the Fourth Five Year Plan period, from BDT 7 billion in FY 1989-1990 to BDT 15.89 billion
in FY 1994-1995. As a share of total private investment, private investment in housing and construction in the FY
1997-1998 to FY 1998-1999 accounted for 47.3 per cent which far exceeded the target of 16.35 per cent for this
period. The proportion of investment in housing and construction in the national GDP increased from 3.4 per
cent in FY 1997 to 4.1 per cent in 1999 (CPD, 2003). In 2000, total outstanding housing loans were about BDT
31 billion (USD 515 million), with the public sector dominating a market share of over 80 per cent.

Objectives of the Study

Real estate financing is a relatively new concept in Bangladesh. Researching on this issue is even newer in our
country. A few comparative studies have been conducted on housing finance, and most publications are “status
reports” offered without an analytic framework. One of the weaknesses of the existing comparative studies is the
poor quality of the data – a consequence of the delayed changes in the governance of housing. Till date, to our
knowledge, three studies have been conducted, one by the Asian Development Bank (ADB) in 1993, the others by
UNDP/UNCHS (Habitat) in 1998 and Jahur, et. al (2006), unfortunately most of the information used in these
studies is now outdated.

The basic objective of this study is to understand the real estate financing sources and the problems associated
with the available financing options in Bangladesh. To accomplish this objective, following specific objectives
have been covered:

1. To examine various formal and alternative sources of real estate financing in Bangladesh.
2. To discuss some major issues and problems in expanding formal housing finance system in Bangladesh.
78 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

3. To critically evaluate some important policy measures necessary to resolve these problems.
4. To identify strategies that can contribute to the development of real estate financing in Bangladesh.

Methodology of the Study

This paper has reviewed extensively the real estate financing issues providing updated data and literatures
considering both developed and developing real estate financing markets along with discussions regarding
problems, prospects and some policy implications of this sector in Bangladesh. Information has been sourced
from academic journals, white papers, industry portals, government agencies, trade associations, industry news and
developments. A critical evaluation of the existing literatures on the issue is being provided for better
understanding and application of the topic under review.

Analysis of Data and Information

Housing finance is defined as the extension of loans to consumers to acquire houses; leasing of houses to the
consumers through financial leasing; and extension of loans to consumers where such loans are secured by the
houses that the consumer owns. In addition, loans extended to refinance the loans explained in this context are
also included in the housing finance.

Housing Finance Systems in the Developing Countries

Housing finance systems in many developing and emerging economies share several characteristics. First, most
housing finance systems are “institutional patchworks” that comprise private sector lenders as well as several
government-managed housing finance institutions or programs (Renaud, 1996). From a regional perspective, the
mortgage markets in South Asia are small and fragmented with the unorganized sector. Regarding the organized
segments, there are distinct commonalities that characterize some of the mortgage markets of South Asia, such as
a heavily subsidized monolith-like state run institution, a fledgling private sector catering to the middle and upper
income segments and players from the banking sector that provide housing finance as a part of their retail
portfolio. The mortgage markets in Sri Lanka, Bangladesh and Pakistan are such archetypes (Karnad, 2004).

The residential housing sector of Bangladesh is characterized by a three-tier market. First are those households
with the highest disposable income (less than 3 percent of the housing market), able to afford high-quality housing
in fully serviced neighborhoods, and able to utilize bank financing or specialized housing finance institutions. The
second tier is the relatively narrow stratum of middle-income households (represents 12 to 15 per cent of the
housing market) that are the main users of specialized housing financial institutions such as Bangladesh House
Building Finance Corporation (BHBFC). This group is the major beneficiary of available public subsidies and is
composed predominantly of public servants and wage/salary earners of large private companies and public sector
corporations. The third and largest of the tiers is the low-income households, for which housing is provided
largely by the private sector, often under illegal and unsatisfactory site conditions (ADB, 1995).
79 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

Status of Real Estate Financing in Bangladesh

McKinney, Jr. (1952) has identified four sources of real estate financing (in order of contribution) during the
housing boom in the United States, such as savings and loan associations followed by commercial banks,
insurance companies, and mutual savings banks. Among these savings and loan associations are growing more
rapidly than other mortgage lenders (Edwards, 1964). In spite of an increasing focus on urban housing and
development, informal systems are still the dominant producers in many developing countries – an estimated 60
and 70 per cent of Mexico’s and Brazil’s current housing stock is built informally because current value chains are
not adapted to the needs and realities of this growing market (Franck and Ferguson, 2004). The two most
common informal sources are local “loan sharks” who charge exorbitant interest rates, and savings groups such as
tandas in Mexico; stokvel, letsema, or ubuntu in South Africa; or minga in Ecuador (Schmidt and Budinich, 2006).

Besides the state-owned BHBFC, other sources of housing finance currently available in Bangladesh are
commercial banks, employee loans, life insurance policies, and informal means. In the rural sector, the housing co-
operatives are the major providers of housing finance. The 1993 ADB survey of homeowners of newly
constructed houses showed that the most important source of housing finance was household savings (more than
one third). Loans from relatives and friends were the second most common form of finance, followed by the sale
of other parcels of land. Employer and bank loans (including Grameen Bank loans) were utilized by 13 per cent of
new home-owners and BHBFC loans were only acquired by 5 per cent, all in the higher income brackets (Hoek-
Smit, 1998). Moreover, several public agencies, such as the Housing and Settlement Directorate, Public Works
Department (PWD), Local Government Engineering Department (LGED) and different City Corporations are
involved in the financing and development of housing and residential infrastructure projects.

After the Liberation, the then government has inaugurated a program to rehabilitate the poor and the homeless in
a number of Guscho Gram (cluster villages). Later, various governments have chalked out different programs to
support the rural landless and homeless people, such as the government's initiative like Asrayon (shelter), Gharey
Phera (return home) and Ekti Bari Ekti Khamar (one homestead one farm). Grihayan Tahbil (housing fund),
administered by the Prime Minister's Office, provides low cost funds to NGOs and private sector developers for
the construction of houses for low-to-moderate-income group people. Apart from these, the government has a
program to lease land to private agencies for building houses for lower and middle income groups with cross-
subsidy from the higher income groups.

Besides government efforts, a large number of NGOs are providing micro credits to the poor. The enactment of
the Financial Institutions Act 1993 opened the door for private housing finance companies. There are now 23
private companies that extend housing finance in Bangladesh. Prominent among them are the Delta-BRAC
Housing Finance Corporation Ltd. and the National Housing Finance and Investment Ltd. These companies
make loans for the construction of houses, acquisition of flats and houses, extension and improvement of existing
housing, and the purchase of housing plots. Most of the private sector players, though relatively new have
nonperforming loans (NPLs) below 1 per cent. But their interest rates are very high comparing with the nation-
owned BHBFC. For example, Delta-BRAC Housing charges interest rate as high as 16 per cent which is higher
80 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

than even that of BHBFC by 1 per cent. The contribution of micro credit lenders (such as Grameen Bank, BRAC,
ASA and Proshika) in this sector is very insignificant.

(a) The Bangladesh House Building Finance Corporation (BHBFC)

BHBFC provides credit facilities for construction, repair and remodeling of dwelling houses and apartments in
cities, towns and other urban areas. In general, priority is given to civil servants and within hat group to those with
the most years of service. BHBFC offers 15-20 year mortgages to individual households at commercial interest
rates that increase as the loan amount increases (UN-Habitat, 2005).

The financing terms are as follows: 15 year fixed rate mortgages at interest rates increasing with the loan amount.
For loans above BDT 1.5 million a simple rate of 15 per cent is charged, whereas a rate of 13 per cent is charged
for loans below BDT 1.5 million in Dhaka. Outside Dhaka, the interest rate is 10 per cent. Eligibility criteria for
the programs specify that for rental properties, three-quarters of the rental income of the property must cover the
loan repayments, and for owner-occupied properties a maximum of 50 per cent of the applicant’s income is
required for loan repayment. The spouse’s income can be used as a guarantee if the applicant’s personal income is
insufficient.

BHBFC was funded by the Bangladesh Treasury, with a cost of funds of 5 per cent per year, an amount well
below the market rate of interest. Moreover, the corporation enjoys a number of advantages – it gets tax
exemption, has much laxer capital requirements than other financial institution in Bangladesh, and has its bond
guaranteed by the national government. But since it has lost its direct government funding, its volume has
stagnated, and its market share of mortgage debt outstanding dropped from 48 per cent to 40 per cent in just
period from 2001 to 2003 (Green and Wachter, 2007).

Although BHBFC is the market leader with a share of 52 per cent, it is not very market savvy compared to
existing private sector players and moreover is plagued with high defaults of over 30 per cent and no additional
funding from the government in the recent years. The amount of loans sanctioned by the corporation in 1999-
2000 was BDT 1,242 million, against which it disbursed BDT 993.59 million.

During the year, the corporation recovered BDT 2,329 million. The outstanding balance of total loans and
advances of the corporation on 30 June 2000 was BDT 27,236.97 million, of which classified loans accounted for
BDT 8,343.07 million (substandard BDT 2,421.15 million, doubtful BDT 2,850.67 million and bad debts BDT
3,071.24 million). However, its loan recovery performance is poor and well below that of the commercial banks.
Its recovery on current loans is 86 per cent (of number of loans), but the cumulative recovery is only 44 per cent
(UN-Habitat, 2005).

BHBFC operates presently only in carefully targeted, higher quality housing sub-markets in Dhaka, and on a very
limited scale in Chittagong and Rajshahi (which received 9.4 per cent and 3.1 per cent of disbursed funds in 1995-
1996 respectively). Poor repayment experience in other urban areas was the reason to concentrate on Dhaka. It
81 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

has financed 125,000 units since its inception, of which more than 30,000 since 1992, mostly for higher income
households (Hoek-Smit, 1998).

Green and Wachter (2007) have identified some inefficiency in the operation of the state-owned BHBFC.
First, BHBFC approval times were exceptionally long – sometimes as much as a year from application to
approval. Second, because mortgage carried below market rates of interest, and were essentially granted by the
government, they were allocated via rationing, rather than underwriting. The allocation process was political,
rather than financial. Third, because BHBFC was for many years not held to performance standards, the agency
had little incentive to service loans, so loan performance was poor. Typically, 20 per cent of loans would be in
arrears. When BHBFC did foreclose, it would typically collect less than 50 per cent of the outstanding loan
balance (For more about this, please see the Table 5 in the Appendix).

Besides BHBFC, two housing finance companies, namely Delta-BRAC Housing Finance Corporation Ltd. (DBH)
and National Housing Finance and Investment Ltd. (NHFIL) are being discussed along with some other private
housing finance companies including commercial banks and their contributions in this sector in the next section.

(b) Delta-BRAC Housing Finance Corporation Ltd. (DBH)

DBH is the pioneer, the largest and the specialist housing finance institution in the private sector in Bangladesh.
After commencing operation in the early 1997, the company has registered commendable growth in creating
home ownership among more than 7,500 families in Dhaka and other major cities of the country. At the same
time, the company has been playing an active role in promoting the real estate sector to the large cross sections of
prospective clients with unfulfilled dream of owning a sweet home.

Delta-BRAC makes loans for the construction of houses, the acquisition of flats and houses, the extension and
improvement of existing housing and the purchase of housing plots for middle and, in the medium term, lower
income households. It provides both construction finance and long-term mortgage finance. In the first year of its
operation, 230 individual loans were sanctioned for a total of BDT 208 million, an average loan size of BDT
900,000. The business plan projects a steady increase in the number of loans and a simultaneous decrease in the
average loan size. The maximum loan is BDT 2 million or 80 per cent of the construction cost or 70 per cent of
the purchase price, whichever is less. Mortgage loans have a maximum term of 15 years and are discretionary
adjustable rate mortgages. Present rates are 16.5 per cent. For owner-occupied properties monthly payments
cannot exceed 30 per cent of household income and in higher risk cases, third party guarantees are required
(Hoek-Smit, 1998).

(c) National Housing Finance and Investment Ltd. (NHFIL)

NHFIL, a private sector housing finance company provides loans for construction of houses, purchase of flats or
houses, extension and improvement of existing houses or flats, and purchase of housing plots. Up to June 30,
2000, the NHFIL provided a total amount of term loans of BDT 204.67 million.
82 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

(d) IDLC of Bangladesh

IDLC of Bangladesh provides real estate financing for individuals, for developers and for corporate users. For
example, IDLC’s “Individual House Loan Scheme” offer financing facilities for the purchase of apartment,
construction of house, renovation and extension of house, purchase/construction of house for the employees
under corporate house finance scheme, and office chamber/space for professionals. Under the “Developer’s
Finance Scheme”, IDLC provides financing for the construction of apartment building, whereas “Corporate
Finance Scheme” deals with the purchase of office space/chamber/display centre, construction/purchase of
commercial building, Constructions of commercially viable project like schools, hotels and hospitals etc., and
constructions of industrial building like factory, warehouse etc.

(e) MIDAS Financing Ltd. (MFL)

MFL has launched “Housing Loan Scheme” to fulfill the dream of the limited income people by extending financial
support in the form of term loan for constructing a house and/or purchasing an apartment/readymade
house/commercial space. Any Bangladeshi citizen within the age bracket of 30-55 years with recognized sources
of income can apply for loan under this scheme. Eligibility for loan is judged on the basis of age, monthly personal
and family income, arrangement of own investment, assets and liability position, job/business status, nature of
income and savings habit of the applicant.

The amount of loan shall be from BDT 0.30 million to BDT 3 million but not exceeding 50 per cent of the
construction cost or purchase price of the property. The loan along with the interest is repayable in equal monthly
installments over a period from 3 to 15 Years. In case of commercial space, maximum terms will be 8 years. The
rate of interest is 15 per cent to 16 per cent per annum. A rebate at 3 per cent on interest is allowed to good
borrowers for timely repayment of all installments. The sanctioned loan will be disbursed at a time or in
installments after full investment of the borrower’s equity. The loan installments can be paid in advance any time
before its maturity. In case of advance payment, the amount should be equal to three or more installments. A non-
refundable amount, which is 0.50 per cent of the loan applied for (minimum BDT 2,000 but not exceeding BDT
5,000) is payable at the time of submission of application. Moreover, an appraisal expense of 1 per cent of the loan
sanctioned is payable while accepting the sanction letter.

The Role of Banking Sector in Real Estate Financing

Until recently, mortgage lending has never been considered quite profitable for commercial banks, that’s why, they
have imposed serious kinds of restrictions upon their mortgage business, both as to terms of individual mortgages
and size of mortgage portfolio. Only recently, some commercial banks, both public and private, specialized banks
along with other financial institutions invest a considerable proportion of their combined assets in housing.

The total housing related advances of the country's banking sector in 1999 was approximately BDT 18 billion,
about two-thirds of which were made by the NCBs. The housing loans by the banking sector amounted to only 4
 83 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

per cent of their assets. The private banks have the largest proportion of housing related assets (9 per cent), and
the foreign banks have the least involvement in the sector (2 per cent). The banking sector's housing loans were
made largely to individuals (54,000) and the housing societies received only about 14,000 loans. A third category of
borrowers of the housing loan is the banks' own staffs, who receive such loan under special terms and conditions.

Table 1: Percentage of Outstanding Housing Sector Advances of Different Types of Banks

30.09.2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
NCBs 41.17 45.35 50.06 53.97 62.75 59.56 2.87 60.06 60.98 39.71
SBs 3.01 2.98 2.57 0.87 2.21 3.27 2.87 2.79 2.88 8.85
FCBs 0.98 0.69 0.56 0.60 0.44 1.23 3.61 1.38 1.33 5.67
PCBs 19.21 18.46 46.82 44.55 34.59 35.94 8.45 35.77 4.36 102.44

It is clear from the above table that percentage contribution of the banking sector is declining over the years.
Credit restrictions, specifying the proportion of deposit funds that could be lent for housing, were only withdrawn
in 1988 and after that time investments in the housing sector soared. Over the years, major problems in loan
recovery began to plague the housing portfolios and the banks gradually decreased the proportion of advances for
housing. The recovery rate of housing sector loans in the banking sector averages approximately 70 per cent. The
poor recovery rate is due mostly to older loans and recovery exceeds 80 per cent on loans disbursed after 1990.
Even the rural house lending program sponsored by the government through a 3 per cent refinancing window at
the Bangladesh Bank, was stopped because of alleged poor recovery rates (Hoek-Smit, 1998).

Table 2: Outstanding Housing Sector Advances with Interest in Lac Taka – All banks

30.09.2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Housing
Societies 145,232 130,067 106,435 118,295 89,778 32,622 21,857 42,336 34,961 413
Urban Housing 434,735 401,896 363,348 299,409 301,785 229,058 223,722 187,207 160,617 55,060
Rural Housing 16,631 10,788 11,373 14,714 17,923 16,611 16,273 11,017 - -
Apartment
Housing
Renovation 22,556 - - - - - - - - -
* All banks include Nationalized Commercial Banks (NCBs), Foreign Commercial Banks (FCBs), Specialized Banks
(SBs), and Private Commercial Banks (PCBs) in Bangladesh
Source: Scheduled Banks Statistics, Bangladesh Bank
84 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

Outstanding Housing Sector Advances with Interest – All banks

500,000
Housing Societies
450,000
400,000
BDT in Lac 350,000 Urban Housing
300,000
250,000
Rural Housing
200,000
150,000
100,000 Apartment
50,000 Housing
0 Renovation
2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Year

From the above data, it is clear that NCBs were reluctant to extend lending to the housing sector. A number of
NCBs only consider housing loans for clients that have other businesses with them and have the income and
assets to support these loans. There is not much competition in the housing lending market and most banks offer
the same terms for the different client options. All loans are for new house construction only, and bank s only lend
for urban housing in secure sub-markets, which can be easily understood from the above table. Clearly there is an
upward trend of contribution in housing societies and urban housing. The contribution towards rural housing only
boost up when government takes initiatives like Grihayan Tahbil (housing fund) or extends credit to the
commercial banks at lower interest rate. Only recently commercial banks have started extending credits for
apartment housing renovation.

Alternative Housing Financing Systems

In the recent years, as an alternative to the existing formal financing system, housing microfinance system has
been evolved. As a whole, the microfinance industry, with approximately 50 million clients worldwide, still meets
only 5-10 per cent of likely demand. Major players in housing microfinance include Grameen Bank (Bangladesh)
with over 600,000 loans since 1984 (Schmidt and Budinich, 2006), followed by several other micro-finance
institutions (MFIs), such as Proshika, BRAC, and ASA. Loans are made on the basis of established membership in
lending programs instead of collateral and a sound track record of repayments on previous loans. Group pressure
and mutual support are used as guarantees for loan repayment. There is no recourse by the financia l institution in
the case of non-payment other than the persuasive and legal ways to recover the loan and future exclusion of the
borrower from the credit program.

(a) Grameen Bank

Grameen Bank has introduced the “Moderate Housing Loan” program in 1984 with a current loan maximum of
BDT 25,000. After the floods of 1987, the Bank has introduced a “Basic Housing Loan” which presently has a loan
maximum of BDT 12,000. It is targeted to the poorest rural households, similar to the income generating credit.
85 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

This program has remained the most popular among its target population. There is also a loan program for the
purchase of small parcels of land and one for the repair of houses. The ratio of the number of basic housing loans
to that of original moderate housing loans is approximately 7:1 (Barua, 1999). Bedsides these, another kind of
housing loans called “Pre-Basic Housing (PBH)” loan amounting BDT 7,500 to 8,500 has introduced to meet the
demand of house dwellers in northern part of the country. The interest rate of housing loan is 8 per cent per
annum (Barua, 1999).

The housing loan, like the other Grameen Bank loans, are provided without collateral, but the borrower must
have title to the land, she must sign an individual pledge which includes, among other things, the repayment
obligation, and she must obtain a pledge from all members of the group or center, that commits them to repay in
case the borrower fails to do so. Repayment is done in weekly installments, beginning five weeks after the start of
construction of the house. The repayment period is calculated on the basis of repaying BDT 1,000 per year, which
is the standard loan repayment for other loans by the Grameen Bank. There is a maximum repayment period of
10 years, but faster repayment is encouraged.

Table 3: Housing Loan Disbursement during the Year 1996-2005 (Amount in Million BDT)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Housing Loan 168.70 687.70 973.90 222.70 73.29 56.30 120.62 177.66 282.05 187.08
Disbursement
No. of 329040 402747 506680 511583 533041 545121 558055 578532 607415 627058
Houses Built
Source: Grameen Bank (2007), http://www.grameen-info.org/bank/hist2005.html

Till date the loans repayment have been excellent. As of September 1999, a total amount of BDT 7420.62 million
(USD 185.09 million) have been disbursed as housing loans for 510,310 numbers of houses. The average loans
size was about BDT 13,847 only (USD 277) (Barua, 1999).

(b) Proshika

Proshika started a housing program for rural areas in 1988 and has provided assistance for the construction of
more than 30,000 houses to date. The total amount disbursed for housing is BDT 193million. Maximum loan
amount could be BDT 10,000 with an equity contribution of BDT 1,000. Loans carry a 5 per cent flat interest
rate. There is no collateral to the loan. Loans have to be repaid in 75 months (6.25 years) at installments of BDT
144.

Proshika’s housing loans are based within the group and the group selects the member most deserving of a
housing loan under strict allocation rules; i.e., only three housing loans per year per group, housing loans can only
be provided to groups that are at least three years in existence. Only those that have a loan for income-generating
activities are eligible for a housing loan in order to ensure repayment capacity. The performance of the housing
loan portfolio is not as good as that for the income-generating loans. While housing recoveries are at 85 per cent
cumulative, loan recovery for the entire portfolio is 96 per cent. Yet interest rates for micro-lending are 18 per
cent while the housing loans at 5 per cent receive a deep cross-subsidy.
86 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

(c) BRAC

BRAC’s housing loans program has started just after the flood of 1988 and focused on the same rural poverty
group. Only members who successfully repaid an income generation loan and saved an equivalent amount to the
monthly repayments for a housing loan, are eligible for this loan. The loans are smaller than those provided by the
Grameen Bank and Proshika and have a maximum of BDT 8,000. Interest rates on housing loans are 5 per cent
and the repayment period is 3 years. Housing loans were only 2.25 per cent of the total loan disbursements at the
end of 1997 (Hoek-Smit, 1998). BRAC has also initiated a home loan program for its own staff members. It
provides fifteen year loans at a flat rate of 10 per cent (equivalent to a compounded rate of approximately 15 per
cent) for housing of a maximum size of 500 sq. ft.

BRAC is considering establishing a moderate-income rural housing loan program with loans up to BDT 20,000. It
is at the same time concerned to move into this market in view of the massive defaults that plagued the housing
portfolio of the Grameen Bank after the recent floods.

(d) ASA

ASA has started a rural housing credit program in 1989-1990. Loans with a maximum of BDT 9,000 were issued
at a flat rate of 10 per cent. It issued about 2,000 to 3,000 loans but it did not have satisfactory results as far as
repayment is concerned. The target group for its lending programs is poverty groups that earn less than BDT
2,000 in rural and less than BDT 3,000 in urban areas and these groups can only afford to repay BDT 25 per week
for their micro-credit. ASA’s management considers housing loans to the lowest income group unfeasible and
intends to target the rural middle class farmers for that lending activity in the future. Interestingly, a sizable group
of borrowers (close to 15 per cent) use part of the income-generating loans they receive for other purposes such
as the improvement of their homes, even though that is explicitly forbidden. This is an indication that the demand
for housing loans is large.

(e) Housing Cooperatives and Credit Unions

Although the co-operative movement is widespread in Bangladesh, particularly in the agricultural sector, it has not
played a significant role in housing financing. Among the 145,000 cooperative societies in Bangladesh only 144 are
housing cooperatives. Most of these cooperatives are set up by high- and middle-income households to allow
them to jointly acquire land for the construction of housing units for their members. The credit unions, which
play a critical role in construction and mortgage lending in many countries, are presently in disarray and insolvent
and cannot be looked at for expansion of housing finance for moderate and lower income households.

Main Issues in Expanding the Formal Housing Finance System

87 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

There are several constraints that hamper the expansion of formal housing finance system in Bangladesh. Hoek-
Smit (1998) has identified the following issues which seeks special attention in expanding the formal housing
finance system in the country.

Distortions in the Savings Rates and Resource Mobilization

High interest rates offered by various government savings plans compared to that of private deposit taking
institutions distort the financial system, which make it difficult for private sector institutions to raise household
funds. For example, BHBFC has access to lower-cost funds, which allows them to set their lending rates below
the market rates, making it difficult for the private sector to compete and, therefore, suppressing the development
of the private mortgage industry. In June, 2003 public sector financial institutions had a cost of funds of less than
5 per cent, while private commercial banks and housing finance corporations had a cost of funds of nearly 8 per
cent and 12 per cent respectively (Green and Wachter, 2007).

Interest Rate Subsidies

For expanding access to housing finance, subsidies either in the form of tax or interest rate should be given to
lower and middle income households. However, interest rate subsidies have some drawbacks apart from
suppressing private mortgage market development, such as (1) a below market interest subsidy encourages people
to borrow as much as possible and repay their loans as slowly as possible, (2) the subsidies increase with inflation
when interest rates go up, a poor index for subsidization, and (3) the subsidies are not transparent.

Subsidy Targeting

The government subsidizes housing for middle- and upper-income households and a scattering of low income
households through BHBFC. The targeting of the existing interest rate subsidy system is inefficient. Subsidized
loans are presently provided to those that could participate in the private market without assistance. BHBFC’s sole
objective is to provide credit facilities for construction, repair and remodeling of dwelling houses and apartments
in cities, towns and other urban areas. So, if any subsidy programs are devised, only the city dwellers or
government officials will be benefited. Until recently, government has always ignored low and middle income
group in targeting subsidies. In FY 2006-07, an amount of BDT 500 million is allocated to the “Fund for Housing
the Homeless” to address the housing problems of the homeless, the poor and the low income group, particularly
the rural families (National Budget, 2006-2007).

Risks, Affordability and Mortgage Instruments

There are only a few different mortgage instruments such as fixed rate mortgage (FRM), graduated payment
mortgage (GPM) to address the perceived risks in mortgage lending or to make mortgage finance more affordable
to middle income households. Among them, FRM is the most common instrument in Bangladesh, where interest
88 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

rates are fixed for the life of the loan and so are the periodic payments, irrespective of interest rate movements in
the market. GPM is also fixed rate mortgage, but the repayment schedule has been set up in such a way that early
payments are lower and increase periodically by a specified percentage.

Interest Rate Calculations

Different types of interest payment calculations are in use within the primary mortgage market (and micro-finance
market), which often creates confusion in the borrowers and increases the difference between government and
non-government rate structures. While compounding is the most common way to calculate interest and is used by
most of the financial sector, simple interest rates, which lower the effective rate, are used for special loans or
customers. For example, BHBFC charges simple interest rates for smaller loans and as an incentive system for
special customers, which translate into much lower effective rates. Also, NCBs charge simple rates for special
customers, using the same nominal interest rate (Hoek-Smit, 1998). MFIs typically charge a flat rate for the entire
loan period. No adjustments are made for principal repayments during the course of the loan. A flat rate therefore
has a higher effective rate than the quoted rate. In fact, the term “effective rate” is used more loosely in housing
finance, and is customarily interpreted as the total burden or overhead of carrying a loan.

Policy and Programs in Real Estate Financing

The Housing Finance Group of the IFC has identified numerous challenges that must be overcome if the housing
finance sector is to fulfill its objective of increasing the availability and affordability of residential housing in
developing countries. These are lending restrictions (mortgage lending is often narrowly restricted to a single sector,
such as government-owned lenders or highly regulated private institutions), infrastructure (emerging markets often
lack the infrastructure that is fundamental to the support of home ownership, such as untargeted subsidies and
disincentives for the financial sector), regulatory environment (legal and regulatory reforms that include lien
registrations, property rights and foreclosure practices), capacity (the pool of skilled managers and field staff
experienced in housing finance is limited in most countries), and outreach (while numerous institutions have learned
how to profitably serve the housing finance sector, they have yet to rise to the challenge of massive outreach,
except in a few countries) (Housing Finance Group, 2006).

The Technical Assistance Performance Audit Report on the Housing Sector Institutional Strengthening (TA No. 1670-BAN) in
Bangladesh has provided an eight-point financing strategy involving (1) introducing a National Home Lending
Program (NHLP); (2) redirecting housing subsidies; (3) increasing lending recovery rates by BHBFC; (4)
expanding the primary mortgage market; (5) rehabilitating BHBFC; (6) adopting a legal and regulatory reform
program to safeguard lenders; (7) enhancing lending in rural areas through village micro-credit schemes; and (8)
improving the climate for attracting finance to the housing sector (ADB, 1995).
89 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

Conclusions and Recommendations

(a) Besides the state-owned Bangladesh House Building Finance Corporation (BHBFC), other sources of
housing finance currently available in Bangladesh are commercial banks, employee loans, life insurance
policies, and informal means. In the rural sector, the housing co-operatives are the major providers of
housing finance. Moreover, several public agencies, such as the Housing and Settlement Directorate,
Public Works Department (PWD), Local Government Engineering Department (LGED) and different
City Corporations are involved in the financing and development of housing and residential
infrastructure projects.
(b) Among others, distortions in the savings rate and resource mobilization, improper distribution of
subsidies for housing finance, inefficient mechanisms in selecting the target group for subsidies, lack of
proper and sufficient financial instruments to address the perceived risk in housing finance, lack of
uniform guidelines for calculation of effective interest rates, are the major limitations of real estate
financing in Bangladesh.
(c) The Technical Assistance Performance Audit Report on the Housing Sector Institutional Strengthening
in Bangladesh has suggested very specific strategies to overcome the potential problems in housing
financing namely introducing a National Home Lending Program (NHLP); redirecting housing subsidies;
increasing lending recovery rates by BHBFC; expanding the primary mortgage market; rehabilitating
BHBFC; adopting a legal and regulatory reform program to safeguard lenders; enhancing lending in rural
areas through village micro-credit schemes; and improving the climate for attracting finance to the
housing sector.
(d) If the housing problems are to be more effectively addressed, housing policies, specially financing issues
must be taken into consideration. Stronger, more effective enabling strategies must be developed by the
public sector to allow housing markets for the various tiers to leverage the activities of the private sector.
The National Housing Policy, 1993 focuses on the basic objectives of providing housing to people at all
strata, especially to the low and middle income groups and those having no access to housing.

Unfortunately, the formal sources of real estate financing are only accessible to a small proportion of the
population. While this policy is a comprehensive approach to housing finance, it remained a plan without
an implementation strategy. The Housing Fund, first proposed by the ADB, was a one-time injection of
funds without a proper institutional structure. It was only accessible to NGOs and government agencies,
not to private lending institutions. Recently steps were taken at policy level geared toward the housing
sector. BHBFC has expanded its housing loan program all over the country (only at the district
headquarters) from July 1, 1999 after 12 years of suspension. BHBFC has also shifted its focus from
providing loans to higher middle income groups to all income groups.

The objectives of the subsidy scheme should be to assist those that do not qualify for a formal sector mortgage
loan and thereby increasing the number of middle income households that can avail themselves of housing
finance. However, we need to keep in mind that subsidized funding for state-owned housing finance entities
90 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

creates distortions in the market place and it should be stopped. Fortunately, for the last few years, BHBFC could
not avail any subsidized funding through the government or government guaranteed debt.

In order to develop a primary mortgage market, financial assistance to different market players (e.g. banks
extending housing loans, specialized housing finance originators) through equity participation, loans, credit lines
and warehouse lines should be given. Standardized and prudent credit underwriting, mortgage origination and
servicing standards and advice on the use of technology to implement such standards should be developed.
Moreover, mortgage insurance or other peripheral services such as credit reporting, property appraisal and
evaluation should be developed.

National housing finance systems must prove themselves competitive by mobilizing and allocating capital
efficiently. BHBFC has only made very limited progress in becoming self-sustainable or in reaching lower income
households. Since BHBFC does not have additional funding they are not in a position to go for new lending. The
prices of mortgaged lands that BHBFC had against their lending 10 to 15 years ago have gone up significantly.
However, BHBFC lacks the capacity to collect those funds and they should therefore sell the loans at a discounted
price to generate new funds.

Age old Insurance and Trust Acts should be changed to facilitate lending by long-term investors in the housing
sector. Sometimes developers are accused for not properly following the procedures for borrowing money from
financial organizations. The involvement of all the three parties (e.g., the developer, the landowner from whom
the land was leased and the apartment buyer) in the process makes the borrowing cumbersome. A simplified legal
method should be devised for all institutions and should be made mandatory. Moreover, default and foreclosure
laws are complicated and it takes more than 5 years before a property can be repossessed. However, debt recovery
and bankruptcy laws have recently been enacted and the GOB launched a loan recovery drive for its NCBs and
other state lending institutions. As part of this initiative, BHBFC has also recently announced a major action to
deal with its non-performing loans.

Though the basic principles of the National Housing Policy are that, the Government would play the role of an
enabler, not the role of a developer or provider in the housing sector, the government can play the role of
providers only to the government employee’s or low income groups. However, it is evident that, over the last two
government period, most of the government built houses is for the upper grade government employees, political
leaders, rather than lower income government employees or the poor people in general.

The introduction of new forms of low-cost housing and the decentralization of housing and planning functions to
local government have yet to be achieved. The provision of new approaches for the financing of low-cost housing
remains a major area of concern. Apart from the more flexible approach to lending to lower income groups
introduced by BHBFC, various government agencies have failed to take significant initiatives to help the lower
income housing market due to unavailability of resources. Recently Bangladesh Bank has introduced a special
housing loan program called Grihayan Tahbil (housing fund), implemented through local NGOs for rural poor.
The size of the loan is BDT 20, 000 per family for a 15-year term. Up to June 2006, BDT 83.74 crore was
disbursed and 36,500 houses were constructed out of the allocated amount of BDT 153.56 crore under house
91 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

building loan among the rural poor. The rate of recovery against disbursed loans is 88 per cent (Bangladesh
Economic Review, 2006). Besides various NGOs/MFIs, Palli Karma-Sahayak Foundation (PKSF) would be the most
suitable organization to manage such a housing fund.

Securitization of assets can remove the paucity of funds through recycling of funds. While some countries in
South Asia have already issued mortgage-backed securities, unfortunately we could not develop such securities yet.
Securitization of assets (one by IPDC of Bangladesh and the other by IDLC of Bangladesh) has been introduced
recently in our country and the concept is still in its childhood (Siddiquee, et. al, 2006). Rigidities in the legal
framework, high stamp duties and lack of uniformity in underwriting norms are some of the hindrances in the
development of a secondary mortgage market in Bangladesh. As long as the secondary market is not developed
whereby frequent buying and selling of flats could take place, real growth of the sector will not be possible. For
doing so, financial assistance to secondary mortgage market entities and conduit lenders through equity
investments and warehouse lines may be provided in addition to creation of Multi-Seller Conduit Vehicles for
issuing Mortgage Backed Securities (MBS) or other bonds.

References
ADB (Asian Development Bank) (1995). Technical Assistance Performance Audit Report on the Housing Sector
Institutional Strengthening (TA No. 1670-BAN) In Bangladesh, www.adb.org/Documents/PERs/TE14.pdf, date
retrieved October 10, 2006

Barua, Dipal Chandra (1999). The Experience of Grameen Bank Housing Program, Bangladesh,
www.iadb.org/SDS/doc/IFM-ChandraBarua-E.pdf, retrieved on November 01, 2006

CPD (Center for Policy Dialogue) (2003). Strengthening the Role of Private Sector Housing in Bangladesh
Economy: The Policy Challenges, Report No. 64, www.cpd-bangladesh.org/publications/dr/DR-64.pdf, date
retrieved on October 10, 2006

de Soto, Hernando (2003). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere
Else, Basic Books 2003.

Edwards, Edward E. (1964). Changing Character of the Real Estate Mortgage Markets, The Journal of Finance, Vol.
19, No. 2, Part 1: Papers and Proceedings of the Twenty-Second Annual Meeting of the American Finance
Association, Boston, Massachusetts, December 27-29, 1963 (May, 1964), pp. 313-320

Franck, Daphnis and Ferguson, Bruce (2004). Housing Microfinance: A Guide to Practice. Kumarian Press,
Cement Association of Brazil Portland

Green, Richard K., and Wachter, Susan M. (2007). The Housing Finance Revolution, Prepared for the 31st
Economic Policy Symposium: Housing, Housing Finance, and Monetary Policy, Jackson Hole, Wyoming,
www.kansascityfed.org/publicat/sympos/2007/PDF/2007.08.21.WachterandGreen.pdf, date retrieved on
November
01, 2006
Hoek-Smit, Marja C. (1998). Housing Finance in Bangladesh - Improving Access to Housing Finance by Middle
and Lower Income Groups, Prepared for Ministry of Local Government, Rural Development and Co-Operatives,
GOB and UNDP/UNCHS (Habitat), http://housingfinance.wharton.upenn.edu/Docs/bareport.pdf, date
retrieved on
September 10, 2006
92 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

Housing Finance Group (2006). Housing Finance, IFC, Global Financial Markets, Washington, DC 20433, USA,
www.ifc.org/ifcext/municipalfund.nsf/AttachmentsByTitle/IFC_Housing_Finance/$FILE/IFC+and+Housing
+Finance.pdf, date retrieved on November 5, 2006

Jahur, Mohammed Saleh, Shahidullah, Mohammad and Sultana, Roushan Ara (2006). Financing Real Estate
Development in Bangladesh: A Study of the Housing Schemes of Some Selected HBFIS, Journal of Services
Research, Special Issue, Vol. 6, pp. 165-177

Karnad, Renu S. (2004). Housing Finance and The Economy: Regional Trends South Asia: Perspectives, The 25th
World Congress International Union For Housing Finance, Brussels, www.hdfc.com/pdf/HDFC-IUHF04.pdf,
date retrieved on October 1, 2006

McKinney, Jr., George, W. (1952). Residential Mortgage Lenders, The Journal of Finance, Vol. 7, No. 1 (March,
1952), pp. 28-46

Nadler, Michael (2006). Evaluating Private Housing Finance Systems, Paper presented at ENHR Conference 2006
Ljubljana, http://enhr2006-ljubljana.uirs.si/publish/W02_nadler.pdf, date retrieved on November 5, 2006

National Budget (2006-2007). Ministry of Finance, Government of the People’s Republic of Bangladesh

National Housing Authority (2004),

http://www.nha.gov.bd/modules.php?name=Content&pa=showpage&pid=19, date retrieved on January 2, 2008

Nordberg, Rainer (2000). Alleviating Poverty through Housing Development, United Nations Centre for Human
Settlements (Habitat), http://www.unchs.org/unchs/english/hdv6n4/alleviating_poverty.htm, date retrieved on
October 1, 2006

REHAB (Real Estate and Housing Association of Bangladesh) (2003). REHAB Housing Fair’ 2003, Dhaka, p. 10

Renaud, B. (1996). Housing Finance in Transition Economies: The Early Years in Eastern Europe and the Former
Soviet Union. Washington, D.C.: World Bank, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=604936, date
retrieved on October 5, 2006.

Schmidt, Stephanie and Budinich, Valeria (2006). Housing the Poor by Engaging the Private and Citizen Sectors:
Social Innovations and “Hybrid Value Chains”, World Urban Forum, Vancouver, Canada

Siddiquee, Mohammad Moniruzzaman., Hossain, Mohammad Farhad., and Islam, K. M. Zahidul (2006). Asset
Securitization in Bangladesh: Practices and Impediments, The Cost and Management, Vol. XXXV, No. 2, March-
April, pp. 19-38

UN-Habitat (2005). Financing Urban Shelter: Global Report on Human Settlements, www.unhabitat.org, date
retrieved on December 28, 2007
93 AIUB Journal of Business & Economics, Vol. 7(2), Aug 2008

Appendix
Table 1: Outstanding Housing Sector Advances with Interest in Lac Taka – NCBs

30.09.2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Housing
Societies 34,651 29,289 23,714 34,564 35,550 5,469 - 4,064 1,456 11,187
Urban Housing 208,372 210,669 210,706 188,360 208,952 147,703 7,394 130,211 117,808 10,842
Rural Housing 11,672 6,160 6,429 10,454 12,451 12,571 113 10,212 - -
Apt. Housing
Renovation 196 - - - - - - - - -
Source: Scheduled Banks Statistics, Bangladesh Bank

Table 2: Outstanding Housing Sector Advances with Interest in Lac Taka – SBs

30.09.2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Housing
Societies 528 362 306 134 39 7 - - 32 -
Urban Housing 18,013 15,518 11,876 3,312 8,960 8,937 7,394 6,635 5,606 4,908
Rural Housing 102 282 162 332 59 159 113 72 - -
Apt. Housing
Renovation - - - - - - - - - -
Source: Scheduled Banks Statistics, Bangladesh Bank

Table 3: Outstanding Housing Sector Advances with Interest in Lac Taka – FCBs

30.09.2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Housing
Societies 3,962 2,258 1,656 1,922 1,302 2,827 1,074 2,854 2,173 1,082
Urban Housing 1,485 1,460 1,042 688 514 595 8,390 454 427 2,061
Rural Housing - - - - - - - - - -
Apt. Housing
Renovation 606 - - - - - - - - -
Source: Scheduled Banks Statistics, Bangladesh Bank

Table 4: Outstanding Housing Sector Advances with Interest in Lac Taka – PCBs

30.09.2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Housing
Societies 22,439 18,575 80,759 81,675 52,887 24,319 2,986 35,418 520 29,115
Urban Housing 93,066 81,289 139,724 107,049 83,359 71,823 18,860 49,907 8,007 27,713
Rural Housing 305 333 4,782 3,928 5,413 3,881 269 733 - -
Apt. Housing
Renovation 3,134 - - - - - - - - -
Source: Scheduled Banks Statistics, Bangladesh Bank

Table 5: Loan Disbursement of BHBFC during 1996-2006 in Lac Taka

1996- 1997-98 1998-99 1999-00 2000-01 2001- 2002-03 2003-04 2004-05 2005-06
97 02
Distributed 17892 10696 9183 12752 11051 11614
9326 6527 4069 4323
Loan
Recovered 16006 17511 19565 23297 23371 25023 27202 30476 34183 36896
Loan
Defaulted 24244 27821 32382 33490 34157 34700 33020 34241 34136 31605
Loan
Source: Bangladesh House Building Finance Corporation, http://bhbfc.gov.bd/eknajar.html