A brief about HBFC/HBFCL covering its six decades of functioning since inception in 1952. HBFC is the pioneering and prominent specialized housing finance company of Pakistan, mainly focusing on financing for house constructions.

1. A Brief About
House Building Finance Corporation
House Building Finance Company Limited
Prepared by:
Syed Sayef Hussain
Acting Managing Director
From 1952 to 2006
Since 2007
April 2014

2. HBFCL is very strict about security of loans. It
boasts of unique and comprehensive knowledge of
property documentation, revenue records and
related matters. In HBFCL, people know their
technical job very well.
That’s why we in HBFCL claim that, we are not just
a company, rather, we are an invaluable national
housing institution!
The strength of HBFCL
2

3. Balance Sheets of 1952 and 2013
Particulars 1952 2013
Cash & Banks 0.734 307.465
Loans & Advances -- 9,739.411
Investments 4.150 10,472.535
Other Assets 0.063 1,041.869
Total Assets 4.947 21,561.280
Particulars 1952 2013
Capital & Equity 4.947 2,823.692
Borrowings -- 11,392.300
Other Liabilities -- 7,345.288
Total Liabilities 4.947 21,561.280
1952 2013
(Rupees in million)
Note: In Minimum Capital Requirement (MCR) of Rs.6.0 billion,
HBFCL is deficient by about Rs.3.2 billion. HBFCL suggests that, by
converting the borrowings (credit lines received from SBP) to
capital to the required extent, this deficiency can be easily
removed. SBP can, on its own, do this, or can use a vehicle like NBP
for this purpose.
3

4. Balance Sheets of 1952 and 2013
4
Analytical comments
The previous slide shows that, HBFC started its journey in
1952 with about only about Rs.5 million of equity. Today it is
carrying an equity of more than Rs.2,800 million, and it has
done it on its own. These are all credit to the Federal
Government. This is undoubtedly a great achievement. It
counters the perception of its being inefficient and corrupt
organization!

5. VISION
To be the prime housing finance institution of
the country, providing affordable housing
solutions to low and middle income groups of
population by encouraging new constructions
in small and medium housing (SMH) sector.
HBFCL’s Mission and Vision
MISSION
To be a socially responsible and commercially
sustainable housing finance institution.
CORE VALUES
• Integrity
• Customer focus
• Commitment to
excellence &
innovation
5

6. 1. Pakistan Employees Cooperative Housing Society, Karachi at the inception of Pakistan
2. Rehabilitation of former East Pakistan’s displaced persons (1971)
3. Flood loan cases (1973)
4. Rehabilitation of displaced persons of Occupied Jammu & Kashmir (circa 1976)
5. Lahore Urban Development Programme (1991-1992)
6. Low cost housing of Surjani Town, Karachi (1979-1985)
7. “Shelter for Shelterless People” scheme of PM Junejo (1985-1988)
8. Widow, orphan, destitute govt servants’ loan remission by Premier Nawaz Sharif (1997-1999)
9. Sindh Gothabad Scheme, started through an Ordinance of Prov. Govt. of Sindh (2001)
10. And many more!
HBFC’s Contributions to the Nation
With the creation of Pakistan, the world saw the largest human migration, and largest
displacement of government employees. The founding fathers of Pakistan immediately realized
the gravity of the situation and the need of habitat for these displaced persons, particularly the
government employees. Within half a decade, that is in 1952, they established House Building
Finance Corporation (HBFC), one of its kind in this region. Since then HBFC has been whole-
heartedly serving the nation at the behest of the Governments through various schemes and
programmes, only some of which are given below. In fact, for serving the nation the
Governments always relied on HBFC!
6

7. S/No Particulars No. of
Accounts
1. Total no. of accounts opened 461,427
2. Total NPLs to date 40,269
3. Total fraud and forgery cases 1,675
4. Total delinquencies 41,944
5. Ratio of delinquencies (4 over 1) 9.09%
Disbursements & Delinquencies
Since inception to date
NOTE:
Under HBFC Act 1952, HBFC was not allowed to write off any Principal amount,
hence delinquency has piled up to the extent stated here, giving the NPL ratio in
present portfolio as more than 60%, which is unrealistic.
Current portfolio position
Outstanding A/Cs 55,951
Non-performing A/Cs 41,944
NPL ratio on count 74.97%
NPL ratio on rupee 54.00%
7

8. Disbursements & Delinquencies
8
Analytical comments
This information in previous slide is a solid proof that, the general perception about
HBFCL that, it is a corrupt and inefficient organization is not real fact. For example, in
over six decades since inception, there have been only total 1,675 fraud cases out of
total 461,427 looks to be quite negligible. We have taken various steps to eliminate
even this negligible possibility of fraud and forgery.
There are however quite considerable number of non-performing cases, which
although is 9% of total cases written by HBFC since inception, but is considerably high
when it is seen in the context of presently outstanding portfolio, which is staggering
75% on count of accounts and 54% on outstanding balances. This is a matter of
concern, but not out of control. Apart from other credible things, if SBP announces
prudential regulations, specific for housing, the situation will change quite drastically,
we believe!

9. History of Disbursements & Recoveries
* Up to March 2014
Since inception
Total disbursements 52.4 billion
Total recoveries 74.6 billion
Net inflow 22.2 billion
Presently outstanding 12.8 billion
Percentage of net inflow 42%
Year-wise detail of disbursements and recoveries:
Year
No. of Accounts
Sanctioned
Disbursed
Amount
Recovered
Amount
Up to 2002 416,464 30.79 38.1
2003 5,892 1.5 2.8
2004 7,597 2.5 2.5
2005 5,996 2.2 2.9
2006 5,716 2.3 3.8
2007 6,812 3.4 3.3
2008 6,130 3.9 3.2
2009 716 0.7 3.6
2010 992 0.6 3.4
2011 1,510 1.1 3.3
2012 1,588 1.3 3.2
2013 1,674 1.6 3.7
2014* 340 0.5 0.8
Total: 461,427 52.4 74.6
9

10. History of Disbursements & Recoveries
10
Analytical comments
In more than six decades since 1952, HBFC disbursed Rs.52.4
billion, and against this it collected Rs.74.6 billion, thus
having a net cash inflow of Rs.22.2 billion, which is 42% of
investment/ disbursements. It shows that, under given
mandates, HBFC did the great job as a specialized financial
institution during all these years.

11. History of Credit Lines
• In distant past, HBFC used to issue debentures to raise funds for its business.
• Since 1973 till 2002, HBFC was given Credit Lines by SBP on guarantee of
Federal Government for 10 years’ term on profit and loss sharing.
• A brief about the credit lines is given below:
• With the approval of the Federal Government and concurrence of the State
Bank, HBFCL wants to have debt-equity swap of part of the outstanding dues
to meet minimum capital requirements.
Total amount received since 1973 till 2002 35,830.9 million
Total amount repaid to SBP 24,588.6 million
Total markup/profit paid to SBP 10,573.7 million
Principal outstanding as of to date 11,242.3 million
11

12. Planned Future Disbursements
Year End
Yearly Housing Finance
Cities of
attentionNumber of
accounts
Amount
(Rs. in Bn/Yr)
2015 5,980 2.200 50
2016 11,000 4.000 85
2017 17,250 6.000 125
2018 22,500 9.000 150
2019 35,000 12.000 150
2020 40,000 15.000 150
12

13. • We are looking for “cash cow” for business growth.
• We intend to focus on housing project financing and town development.
• We intend to enter into real estate market for generating required funds.
• We would like to address tenure mismatch in housing finance, where
lending are for a very long period, whereas fund available in the market
are for very short period.
• To cope with this mismatch, SBP and IFC is already working for
establishment of mortgage refinance company on the initiative of HBFCL.
This needs to be expedited.
• Housing finance specific Prudential Regulations are the need of the day.
Presently housing finance, which are backed by invaluable real estate, are
being treated and regulated as highly unsecured consumer financing.
Way Forward
13

14. Old HBFC
Up to
2006

15. New HBFC
Since 2006

16. Organizational Structure of HBFCL
R.O.
Z.O
B.O
B.O
Administrative
Coverage
Current Planned
HO 1 1
RO 3 3
ZO 10 10
BO 51 51
RPO - 29*
Rep.OH.O.
Z.O
Key
H.O. Head Office
R.O. Regional Office
Z.O. Zonal Office
B.O. Branch Office
Rep. O Representative Office
Z.O
Z.O
Rep.O
B.O
B.O
Rep.O
Rep.ORep.O
*To cater remote areas of the country, SBP’s permission has been sought to open ROs
16

17. Options regarding HBFCL
• The Pakistan Government may like to make HBFCL fully effective
• The following options have been evaluated (CMHC, Canada):
– Option 1: Restructure and activate HBFCL to the fullest
– Option 2: Close HBFCL and start up a new mortgage lender
– Option 3: Close HBFCL and rely on existing mortgage lenders to serve
Pakistan
• Recommendation: Restructure and Activate
– Offer some of government’s and SBP’s holdings to some strategic investors including National Bank of
Pakistan
– Offer some portion to capital to the market, to enhance the worth of Government’s holdings
– Accordingly serve the nation and the vote bank
17