Dhaka, Bangladesh (BBN)- The demand for housing loan under the refinancing scheme of the central bank is increasing gradually mainly due to the lower interest rate, officials said.

Around BDT 3.40 billion has already been disbursed by commercial banks and non-banking financial institutions (NBFIs) from the BDT 5.0 billion fund. But the central bank has no plan to inject more funds right now into the scheme.

“It’s not our prime duty to continue injecting more funds into the refinancing scheme,” a senior official of the Bangladesh Bank (BB) said. But the central bank may increase the fund further considering the public interest, he added.

Market operators said the central bank should increase the allocation under the refinancing scheme to meet one of the basic needs of the people, particularly the middle income group.

“We’ll formally request the central bank to increase the fund further under the refinancing scheme,” Chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA) Mafizuddin Sarker said.

He also added the fund is aimed at building apartments in areas like Tongi, Gazipur and Narayanganj outside the capital, because the middle class people are mainly taking the credit support to buy flats.

“It’s a great support for the middle income group to meet their one of the basis needs,” Mr. Sarker noted.

The demand for the low-interest housing loan is increasing day by day, BB officials said
Banks and NBFIs applied for around BDT 350 million a month under the scheme recently, compared to around BDT 200 million sought earlier, they informed.

In April this year, the central bank increased its refinancing fund for housing loans to Tk 5.0 billion from Tk 3.0 billion earmarked earlier with the expansion of the areas under the scheme in Dhaka city.

The central bank had relaxed its rules and regulations including more areas close to Dhaka City Corporation like Uttar Khan and Dhokhin Khan under the scheme for providing loans.

The people, who are living in six city corporations and the municipal areas of Tongi, Savar, Gazipur and Narayanganj are eligible for such loan facilities.

Under the BB scheme, an applicant having a monthly income up to BDT 50,000 will be entitled to a loan of maximum BDT 2.0 million at 9.0 percent interest rate.

Currently, the banks provide loans to the housing sector at interest rates ranging between 13.00 percent and 15.50 percent, according to the central bank statisticians.

The repayment period of a loan under the refinancing scheme is 20 years with a maximum grace period of one year.

A total of 32 commercial banks and NBFIs have so far signed agreements with the central bank to disburse the housing loans among the people belonging to the middle class.

On July 18, 2007, the central bank formed the BDT 3.0 billion fund initially for disbursement over a period of three years.

BBN/SSR/SI/AD-28August09-2:19 am (BST)