Real Estate

Course No: 611 Course Title: Real Estate Finance
A Studyon “Features ofReal Estate Finance inBangladesh”- A Case Studyon Five Financial Institutions 1
1. INTRODUCTION
The real estate sector is the growth centre for the development of an economy. Bangladesh,
being one of the densely populated nations in the world, has been experiencing severe of
houses shortage for its citizens. The private sector housing real estate developers have met a
small proportion of the national housing demand in the last more than twenty years. The gap
between demand and supply is still joy wide.
Despite inadequate policy preparations, these real estate developers have been successfully
making business although the middle and the low income households are still untapped. With
the larger proportion of people living in this income group, the private housing real estate
sector has a huge scope to grow in this country. The positive notion is supported by many key
indicators such as increasing house rent, inadequate and costly land, easier financing
availability and more. To pave the way for the organic development of the industry, the
problem of long existent inadequate financing availability at lower burden of terms and costs
must have to be removed immediately.
1.1 BACKGROUND OF THE STUDY
Following a request from the Government in 1989, the Bank fielded a Sector Mission in early
1990 to review the problems and issues facing the housing sector. The Mission identified the
need to strengthen the institutional and technical capabilities of the various housing sector
agencies. Subsequently, the Government requested assistance for institutional strengthening
of the housing sector.
We have got attached to the concept of ‘Terms of Real Estate Loan’ (specially the
“Refinancing and Prepayment Issues” and “Real Estate Valuation Process” that we came
across in our Real Estate Finance Course of EMBA Program) while we started our MBA at
University of Dhaka and therefore after getting consent of course instructor we have given
current market structure and trends of real estate sector in Bangladesh related topic.
Consequently, we are also determined to know about the growth pattern, terms and
conditions by real estate financing institutions, eligibility of real estate loans, exclusive
features of real estate financing institutions and comparing these features among selected real
estate finance providing institutions in Bangladesh.
1.2 OBJECTIVES OF THE STUDY
1.2.1 Overall objective:
The study will try to identify the current market structure and related terms and conditions
with exclusive features of real estate loan providing financial institutions in Bangladesh.
1.2.2 Specific objectives:
The specific objectives of the study will be:
 To identify the features of real estate loans of financial institutions in Bangladesh.
 To analyze and compare the current market structure and trends of real estate loans in
Bangladesh.
 To provide some suggestions for the development of real estate sector in Bangladesh.

1.3 METHODOLOGY OF THE STUDY
This paper has reviewed extensively the real estate financing issues providing updated data
and literatures considering both state owned specialized financial institutions and private
commercial banks. The data were collected from using the secondary sources. We took a
sample of five financial institutions to complete the study. These are:
1) Bangladesh House Building Finance Corporation (Specialized Financial Institutions)
2) Delta Brac Housing Finance Corporation Ltd. (Largest Housing Finance Institutions)
3) Dhaka Bank Limited (Private Commercial Banks)
4) Bank Asia Limited (Private Commercial Banks)
5) Standard Chartered Bank of Bangladesh (Multinational Commercial Banks)
1.4 RECENT SCENARIO OF HOUSING FINANCE IN BANGLADESH
Total outstanding housing loans from
banks and financial institutions as of
end June 2014 amounted to Taka 454.2
billion (Table-1), which was 9.7 percent
of total credit to the private sector. In
recent years, significant changes have
taken place in total housing loan
portfolios. Of the total, private banks
with ample deposit resources have been
expanding their housing loan portfolios,
and now have dominant market position
with the largest share of Taka 235.6
billion in outstanding housing loans as
of end June 2014. The SCBs have the
second largest share of Taka 100.1
billion and other banks Taka 31.1 billion
in outstanding housing loans as of end
June 2014. Besides, two private sector
specialized housing finance companies
also provide a significant amount of
loan. They supply fund for their
operations by taking long term deposits including some contractual deposit schemes. The
state owned House Building Finance Corporation (HBFC) has the third largest share of Taka
29.6 billion in outstanding housing loans as of end June 2014. The sources of Corporation's
fund are paid-up capital by the Government and the proceeds as received by selling
Government guaranteed interest bearing debentures to different organizations. The second
mode of funding has been unavailable in recent years.
Table-1: Outstanding Housing Loans (Billion in TK.)

2. MARKET STRUCTURE,FEATURES,TERMS AND CONDITIONS OF
REAL ESTATE FINANCING INSTITUTIONS
2.1 BANGLADESH HOUSE BUILDING FINANCE
COPERATION (BHBFC)
House Building Finance Corporation was established in 1952 to provide financial assistance
in housing sector. After independence, the corporation was reconstituted as Bangladesh
House Building Finance Corporation (BHBFC) by the President’s Order no 7 of 1973.
Shelter is one of the five basic needs of human being to alleviate the acute housing problem.
The primary objective is to alleviate the acute housing problem in the country. Although
some of the commercial banks and private sector housing institutions are providing financial
assistance to this sector, yet, BHBFC continues to be the major source of housing credit for
the middle and lower middle income group of people till today. BHBFC is the only state-
owned specialized financial institution of its kind. The total paid-up capital of the
corporation is paid by the Government of Bangladesh.
2.1.1 REAL ESTATE LOAN OF BHBFC
Being the only specialized government owned financial institution in the housing sector
BHBFC has been playing a vital role for providing loan in this sector. Although, there are
some other commercial banks, NGOs, leasing Companies financing in this sector, BHBFC
continues to be the main source of loan for the middle and lower middle income group of
people.
2.1.2 CUSTOMER SEGMENT OF BHBFC
Majority of its clients are civil servants.
Table-2: Home Loan of Bangladesh House Building Finance Corporation (BHBFC)
Loan amount Up to BDT 20 lac.
Repayment tenure Maximum 32 years.
Payment method Equal Monthly Installments.
Loan to price ratio 70:30.
Interest rate Both Adjustable and Fixed Rate (Starting
from 6% in rural and 10-12% in city areas).
Early settlement & partial adjustment fees Yes.
EMI charge at Prepayment Minimum 500 tk.
Refinancing/ Takeover Facility Available.
Processing Fee Yes (Minimum 20%).
Mortgage Types Third Party/ Fourth Party Agreement.
Percentage of Actual Recovery 84.22% (Annual Report, 2014).
Source: www.bhbfc.gov.bd

2.1.3 EXCLUSIVE FEATURES OF BHBFC HOSING LOAN
Convenient features & simple procedures.
Short-term special loans etc.
2.1.4 TYPES OF LOAN OF BHBFC IN REAL ESTATE SECTOR
Table-3: Types of Housing Loan of Bangladesh House Building Finance Corporation
(BHBFC)
General Loans General loans for construction of single/ multi-storied residential
houses on land owned by a single person/ by a husband and wife.
Group Loans Group loans for the construction of flats by a group of borrowers on
a plot owned jointly.
Apartment Loans Apartment loans for purchasing under-construction apartments in
Dhaka and Chittagong Metropolitan areas.
Adjustment Loan Adjustment loans for completion of an under-construction house.
Loans for
Constructing Semi-
Pacca Houses
Loans for constructing semi-pacca houses in district and selected
upazila headquarters.
Source: www.bhbfc.gov.bd
2.1.5 AMOUNT OF LOAN CIRCULATION BY BHBFC
Table-5: Loan Sanctioned, Disbursed and Recovered by BHBFC During Last Three
Years (TK. in Cr.)
Fiscal Year Loan Sanctioned Loan Disbursed Loan Recovered
2013-2014 285.18 389.90 462.96
2012-2013 539.25 433.39 451.94
2011-2012 366.47 298.08 418.77
Source: Annual Report 2013-2014, Page: 53-71.pdf
Table-4: Existing Terms & Conditions of Loans of the BHBFC

2.2 DELTA BRAC HOUSING FINANCE CORPORATION
LIMITED (DBH)
Delta Brac Housing Finance Corporation Ltd. (DBH) is the pioneer, largest and specialist in
Housing Finance institution in the private sector of the country. After commencing operation in
the early 1997, the company has registered commendable growth in creating home ownership
among more than 23,000 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 who had but yet unfulfilled dream of owning a sweet home.
Among all Banks and Financial Institutions of Bangladesh only DBH has been rated the highest
'AAA' credit rating. The level of credit rating provides a very important indication of the financial
safety, security and strength of the concerned Bank or Financial Institution and is particularly
relevant to its depositors and other investors such as shareholders and lenders.
2.2.1 REAL ESTATE LOAN OF DBH
DBH supports for apartment loan in Dhaka, Chittagong and Sylhet.
2.2.2 CUSTOMER SEGMENT OF DBH
Both Corporate Client & Individual Client.
Both Employed and Self- Employed.
Executives of Multinational Company/ Banks/ Non Financial Institution etc.
Table-6: Real Estate Loan Features of Delta Brac Finance Corporation Ltd.
Loan amount Up to BDT 20 lac.
Repayment tenure Maximum 20-30 years.
Loan to price ratio 80:20
Interest rate Starting from 12.00%.
Hidden cost Yes.
Refinancing/ Takeover Facility Available
Processing Fee Up to 0.5% of Loan Amount.
Charges of Tenure 2000 tk.
Minimum monthly Income of Client BDT 25,000.
Charge/Partial Release of Security 5000 tk.
Mortgage & Redemption cost At Actual.
Amortization (Breakdown of Repayment) Free.
EMI charge at Prepayment 1000 tk.
Percentage of Actual Recovery 89.23% (Annual Report, 2014).
Source: www.deltabrac.com

2.2.3 PERFORMANCE OF DBH HOUSING LOAN
Against the backdrop of languid circumstances prevailing in the real estate sector as well as
the overall economy, the performance of DBH home loan operations has been respectable.
Depressing macroeconomic conditions i.e. bearish capital market; political uncertainty, lack
of investment appetite in the business community has created a grim scenario in the financial
sector. Being a housing finance specialist DBH has forecasted the situation prudently and
focused on maintaining the health of its existing portfolio and strengthening its focus on core
retail clientele. The Company’s loan book in housing finance grew at a very moderate pace of
7.75 percent to Taka 26.83 billion during the financial year while keeping gross NPL ratio at
the level of 0.22 percent only. During the year, the gross interest income from the housing
finance portfolio stood at Taka 3,884 million. DBH holds an adjustable rate home loan
portfolio and the average rate of interest on the home loan book is decreasing in line with the
downward shift in the market rate of interest.
Even though managing settlements ahead of schedule was a challenge this year, the
disbursement figures experienced a healthy rise compared to last year and your Company has
retained its position as the Financial Institution with the largest market share. Total approvals
during the year stood at Taka 6,834 million as against Taka 5,405 million in the previous year
showing a growth of by 26 percent from last year comparatives. Total disbursement at the
end of FY 2013-14 was Taka 6,583 million as against Taka 5,356 million of preceding
financial year. During the year under review, a total of Taka 4,676 million was received by
way of repayment of principal on loans through monthly installments and redemption ahead
of schedule. Gross non-performing loans as of June 30, 2014 have been fully provided for
and additionally, as required by Bangladesh Bank, DBH has a loan loss reserve amounting to
1% of outstanding loans.
Figure-1: DBH’s Housing Loan Portfolio & Performance in 2014
Source: DBH Annual Report 2013-2014, Page: 22.pdf

2.3 DHAKA BANK LIMITED (DBL)
Dhaka Bank is one of the pioneering banks in Consumer Banking sector amongst local and
multinational financial institutions. In 2012, we strengthened our focus on customer segment
through proper channeling of variety of retail products and services to ensure quality asset/
liability, product innovation and brand building. Consumer Banking at Dhaka Bank Limited
was launched in 2002.
2.3.1 REAL ESTATE LOAN OF DBL
Dhaka Bank Home Loan with its extensive features and competitive interest rates helps its
clients. Its Home loan gives the borrower the security of fixed-rate payments on principal and
interest for the life of the loan, a steady repayment schedule, and potential tax advantages.
2.3.2 CUSTOMER SEGMENT OF DBL
Both Corporate Client
Individual Client (i.e. business person and others)
Executives of Multinational Company & Executives of Bank
Non Financial Institution
Doctor/Engineer/Defense Officers/Teaching Staff of Reputed Institution etc.
Table-7: Real Estate Loan Features of Dhaka Bank Ltd.
Loan amount BDT 1.20 Crore.
Repayment tenure Maximum 15 years.
Loan to price ratio 70: 30
Interest rate Starting from 12.00%.
EMI charge at Prepayment Minimum TK. 2000.
Refinancing/ Takeover Facility Available.
Loan Approval 10 working days (upon fulfillment of
documents).
Processing Fee Starting from 1.50%.
Age of Client Minimum: 25 years and maximum 65 years.
Mortgage Types Registered Mortgage/ Third Party Agreement
Percentage of Actual Recovery 92% (Annual Report, 2014).
Source: www.dhakabankltd.com

2.3.3 EXCLUSIVE FEATURES OF DHAKA BANK LIMITED HOSING LOAN
Competitive Fixed Rates.
Flexible Terms.
Convenient Access.
2.3.4 BASIC DOCUMENTS NEEDED FOR DHAKA BANK’S HOUSING LOAN
Duly filled Application Form & CIB undertaking with signature.
Application Fee Tk.1000.
CIB Fee TK. 200 for each (applicant & 2 guarantors).
Latest studio print color passport size photograph of applicant/co-applicant (if any),
spouse and guarantor duly attested by the Branch Manager.
National ID Card/Passport (photocopy) of applicant / co-applicant (if any), spouse and
guarantor duly attested by the Branch Manager.
Latest Personal TIN with Certified copy of IT10B of Applicant/Co-applicant (if any),
Spouse (if available), 3rd party Guarantor (if available) duly attested by the Branch
Manager.
Personal Bank Statement: For salaried person: last six months, For Business person &
others: last one year.
Sanction copy & Loan Account Statement (if any existing loan).
Price quotation duly accepted by client.
Recent electricity Bill (if residence is self owned/Parent Owned/Family Owned).
2.3.5 RATIO OF REAL ESTATE LOAN TO TOTAL LOAN OF DHAKA BANK LIMITED
This figure shows that Dhaka Bank Limited sanctioned 12.51% loan in real estate sector
against the total loan sanctioned in 2014. However it sanctioned highest percentage loan in
real estate sector in 2013 against total loan sanctioned in that year which was 13.19%.
12.27%
13.19%
12.63%
12.51%
11.8 12 12.2 12.4 12.6 12.8 13 13.2 13.4
2011
2012
2013
2014
Percentage
Figure-2: Percentage of Sanctioned Housing Loan
Against Total Loan of Bank Asia Limited
Source: Annual Reports of Dhaka Bank Limited (2011-2014).

2.4 BANK ASIA LIMITED
Bank Asia has been launched by a group of successful entrepreneurs with recognized
standing in the society. The management of the Bank consists of a team led by senior bankers
with decades of experience in national and international markets. The senior management
team is ably supported by a group of professionals many of whom have exposure in the
international market. It set milestone by acquiring the business operations of the Bank of
Nova Scotia in Dhaka, first in the banking history of Bangladesh.
2.4.1 REAL ESTATE LOAN OF BANK ASIA LIMITED
Under the segments of retail banking Bank Asia provides loans for real estate sectors and
housing finance. These products facilitate the customer with financing for purchase of
flat/house, construction of new house, extension and renovation of existing house etc.
2.4.2 CUSTOMER SEGMENT OF BANK ASIA LIMITED
Any Bangladeshi individual who has the means and capacity to repay bank loan can apply for
Housing Loans. In specific terms, these could be salaried executives of multinational and
middle to large size local corporate, Government officials, Officials working in reputed
NGOs (Non Government Organizations), international aid agencies & UN bodies, any tax
paying businessmen of repute, any employed/ self-employed/ tax-paying individual having a
reliable source of income.
Table-8: Real Estate Loan Features of Bank Asia Ltd.
Loan amount Tk. 3,00,000.00 to Maximum
Tk.75,00,000.00
Repayment tenure Maximum 15 years, Grace Period: 1 year
max.
Loan to price ratio 70: 30
Interest rate Competitive (Minimum 13.5%)
Early settlement & partial adjustment fees No
EMI charge at Prepayment Minimum TK. 3500
Grace Period maximum 1 year
Rate of Rent/Profit/Mark-up 16% (may be reset time to time by the Bank)
Processing Fee 0.5% of investment amount or Tk. 5,000/=
whichever is higher. (may be reset time to
time by the Bank)
Age of Client Minimum: 25 years and maximum 65 years
Minimum monthly Income of Client 2.5 times of the installment size
Percentage of Actual Recovery 95% (Annual Report, 2014)
Source: www.bankasia-bd.com

2.4.3 EXCLUSIVE FEATURES OF HOSING LOANS OF BANK ASIA LIMITED
Bank Asia’s House Finance Scheme will facilitate the client to have financing for
purchase of new or reconditioned flat, house, construction of new house, extension of
existing house etc.
No hidden cost.
No early settlement & partial adjustment fees.
2.4.4 ELIGIBILITY OF HOUSING LOAN FROM BANK ASIA LIMITED
Age limit: Minimum 25 years, Maximum 65 years at loan maturity
Minimum income: Debt burden ratio based
For salaried individual, minimum service length of 1 year and must be a confirmed
employee. For self employed individual, a business record of minimum 3 years &
Land lord having substantial rental income.
2.4.5 RATIO OF REAL ESTATE LOAN TO TOTAL LOAN OF BANK ASIA LIMITED
This figure shows that ratio of real estate loan against total loan sanctioned of Bank Asia
increased from 2011 to 2014. In 2014 the percentage of real estate loan against total loan
sanctioned of Bank Asia reached 4.39% which was 3.76% in the previous corresponding
year. In 2012, the real estate loan of Bank Asia was 3.41% and in 2011 it was 3.55% against
total loan sanctioned. Therefore, it can be said that the Bank Asia Limited is extending its
business in real estate sector of Bangladesh.
3.55%
3.41%
3.76%
4.39%
11.8 12 12.2 12.4 12.6 12.8 13 13.2 13.4
2011
2012
2013
2014
Percentage
Figure-3: Percentage of Sanctioned Real Estate Loan
Against Total Loan of Bank Asia Limited
Source: Annual Reports of Bank Asia Limited (2011-2014).

2.5 STANDARD CHARTERED BANK
Today, Standard Chartered Bank is the largest international bank in Bangladesh with 26
Branches & Booths and 83 ATMs; employing over 2,000 people. It is the only foreign bank
in the country with presence in 6 cities – Dhaka, Chittagong, Khulna, Sylhet, Bogra and
Narayanganj; including the country's only offshore banking units inside Dhaka Export
Processing Zone (DEPZ) at Savar and Chittagong Export Processing Zone (CEPZ). It also
has a glorious heritage to introduce many ‘firsts’ in this market – starting from Auto Coupon
Encashment Service of Sanchaypatra to International Debit Card to Gold Deposit
Transaction. On the consumer convenient side it has been continuously coming up with
newer technology and platforms like introducing first ATM in Bangladesh to state-of-the-art
Online Banking Platform or even the Facebook platform to stay close to our customers,
always.
2.5.1 REAL ESTATE LOAN OF STANDARD CHARTERED BANK
Standard Chartered’s home loan provides attractive financing for anew house or an
apartment. Clients can also avail Home Loan for renovation, facelift, extension and
furnishing work in their existing house or apartment.
2.5.2 CUSTOMER SEGMENT OF STANDARD CHARTERED BANK
Both Corporate Client & Individual Client
Executives of Multinational Company, Executives of Bank /Non Financial Institution
etc.
Table-9: Real Estate Loan Features of Standard Chartered Bank Ltd.
Loan amount Up to BDT 10,000,000
Repayment tenure Maximum 25 years
Loan to price ratio 80:20
Interest rate Variable interest rate (Minimum 13%)
Partial adjustment fees No
EMI charge at Prepayment 2% prepayment amount (Minimum Tk. 3000)
Processing Fee Starting from 1.50% + 15% VAT on
processing fee
Age of Client Minimum: 25 years and maximum 65 years
Minimum monthly Income of Client BDT 25,000
Percentage of Actual Recovery 98% (Annual Report, 2014)
Source: www.sc.com/bd

2.5.3 EXCLUSIVE FEATURES OF STANDARD CHARTERED BANK HOSING LOAN
No personal guarantee or cash security required.
No prior account relationship required with Standard Chartered.
Option to pay only interest during construction period.
Quick approval process.
Refinancing Options are available.
2.5.4 RATIO OF HOUSING LOAN TO TOTAL LOAN OF STANDARD CHARTERED
BANK OF BANGLADESH
This figure shows the yearly percentage of housing loan sanctioned against total loan
sanctioned of Standard Chartered Bank of Bangladesh. It is clearly understood that total
housing loan sanctioned by SCB decreased from 2011 to 2014. The highest sanctioned
housing loan was in the last quarter of 2011 which was 9.98% of total loan of the respective
year. However, gradually it slowed down. In the last quarter of 2012 it reduced to 8.7%
against total loan sanctioned and in the last quarter of 2013 it further reduced to 7.4% against
total loan. Finally, it sanctioned only 6.9% housing loan against total loan in the last quarter
of 2014.
9.98%
8.7%
7.4%
6.9%
0 2 4 6 8 10 12
2011 Q4
2012 Q4
2013 Q4
2014 Q4
Percentage
Figure-4: Percentage of Housing Loan Against Total Loan of
Standard Chartered Bank of Bangladesh
Source: Annual Reports of Standard Chartered Bank of Bangladesh (2011-2014).

3. COMPARISON OFOFFEREDFEATURES BY SELECTED
REAL ESTATE FINANCINGINSTITUTIONS
Comparison of Housing Loan Sanctioned in 2013-14
This figure shows that Delta
Brac Housing (DBH)
sanctioned highest loans in
housing sector in 2013-14 and
the Dhaka Bank Ltd.
Sanctioned lowest loans in
2013-2014. On the other hand
Bangladesh House Building
Finance Corporation (BHBFC)
sanctioned Tk. 5392.5 million
in 2014 and TK. 2851.8
million in 2013 which is 47%
lower than 2014. Moreover,
Bank Asia Ltd. Sanctioned
5123.09 million TK. in 20104
and 3947.28 million TK. in
2013. Standard Chartered Bank
of Bangladesh sanctioned TK. 6790.88 million in 2014 and TK. 7702.18 million in 2013 in
the housing and real estate sectors of Bangladesh.
Comparison of Maximum Loan Offer
This figure shows the
maximum amount of loan
sanction for housing demand in
Bangladesh by sample
financial institutions. Here, we
can see Dhaka bank ltd.
Sanctions maximum loan of
Tk.1.2o Cr. for housing finance
in Bangladesh. Bangladesh
House Building Financial
Corporation (BHBFC) and
Delta-Brac Housing (DBH)
sanctions 20 lac maximum
loans for housing finance.
Moreover, Bank Asia and Standard Chartered Bank of Bangladesh sanctions TK. 75 lacs and
TK. 1 Cr. for housing Finance.
BHBFC DBH Bank Asia
Dhaka
Bank
Standard
Chartered
2013 2851.8 26603.5 3947.28 193.9 7702.18
2014 5392.5 24689.3 5123.09 284.13 6790.88
2851.8
26603.5
3947.28
193.9
7702.18
5392.5
24689.3
5123.09
284.13
6790.88
0
5000
10000
15000
20000
25000
30000
TakainMillion
Figure-5: Comparisons of Housing Loan
Sanctioned in 2013-2014
0
20
40
60
80
100
120
BHBFC DBH Bank Asia Dhaka
Bank
Standard
Chartered
20 20
75
120
100
TakainLakh
Figure-6: Comparison of Maximum Loan Offer

Comparison of Loan to Property Value
Standard Chartered Bank of
Bangladesh and Delta-Brac
Housing (DBH) offers highest loan
against property value which is
80% in both cases. Moreover,
Dhaka Bank, Bank Asia and
offers 70% loan to the property
value.
Comparison of Loan Repayment Tenure
offers maximum loan repayment
tenure which is 32 years. Delta-
Brac Housing (DBH) has maximum
30 years for repayment of housing
loans, Dhaka Bank and Bank Asia
has 15 years and the Standard
Chartered Bank of Bangladesh has
maximum 20 years for for
repayment of housing loans.
Comparison of Minimum Interest Rates of Housing Loan in 2014
This bar chart shows that
Bangladesh House Building Finance
Corporation (BHBFC) offered
housing loan at 6% interest rates in
2014, however, it varies area to area
at 6%-10%. Delta-Brac Housing
(DBH) and Dhaka Bank offered
housing loan in 2014 at 12% interest
rate. Moreover, Standard Chartered
Bank of Bangladesh offered housing
loan at 13%interest rate in 2014 and
Bank Asia offered at 13.50% interest
rate in 2014.
65% 70% 75% 80%
BHBFC
DBH
Bank Asia
Dhaka Bank
Standard Chartered
70%
80%
70%
70%
80%
Percentage
Figure-7: Comparison ofLoan to Property Value
0 10 20 30 40
BHBFC
DBH
Bank Asia
Dhaka Bank
Standard Chartered
32
30
15
15
25
No. of Years
Figure-8: Comparison of Loan Repayment
Tenure
6%
12%
13.50%
12%
13%
0% 5% 10% 15%
BHBFC
DBH
Bank Asia
Dhaka Bank
Standard Chartered
Percentage of Interest Rate
Figure-9: Comparison of Minimum Interest
Rates of Housing Loan in 2014

Comparison of Loan Processing Fees of Housing Finance
Bangladesh and Dhaka Bank
charges highest amount of housing
loan processing fees though
Bangladesh charges 15% VAT on
this fee amount. Bangladesh House
Building Finance Corporation
(BHBFC) charges lowest amount of
processing fees which is only
0.20% of the loan amount.
Moreover, Bank Asia and Delta-
Brac Housing (DBH) charges
0.50% processing fees of the loan amount.
Comparison of Actual Recovery of Housing Finance in 2014
This bar chart shows the percentage
of actual recovery of loan sanctioned
in housing finance in 2014. Standard
Chartered Bank of Bangladesh
recovered the highest (98%) and the
Bangladesh House Building Finance
Corporation (BHBFC) recovered the
lowest (86.16%) in 2014. Dhaka
Bank recovered 92% and Bank Asia
recovered 95% in 2014.
Comparison of Prepayment Charge of Housing Finance in 2014
This bar chart shows that the Bank
Asial Ltd. charges highest amount
(3500 TK.) for prepayment penalty
and Bangladesh House Building
charges lowest amount (500 Tk.) for
prepayment penalty. Moreover,
Delta-Brac Housing (DBH) charges
TK. 1000, Dhaka Bank charges TK.
2000 for prepayment penalty.
0.20%
0.50%
0.50%
1.50%
1.50%
0.00% 0.50% 1.00% 1.50% 2.00%
BHBFC
DBH
Bank Asia
Dhaka Bank
Standard Chartered
Percentage of Processing Fees
Figure-10: Comparison of Loan Processing
Fees of Housing Finance
84.22%
89.23%
95.00%
92.00%
98.00%
80.00% 85.00% 90.00% 95.00% 100.00%
BHBFC
DBH
Bank Asia
Dhaka Bank
Standard Chartered
Percentage of Loan Recovery
Figure-11: Comparison of Actual Recovery
of Housing Finance in 2014
500
1000
3500
2000
3000
0 1000 2000 3000 4000
BHBFC
DBH
Bank Asia
Dhaka Bank
Standard Chartered
Prepayment Charge in TK.
Figure-12: Comparison of Prepayment
Charge of Housing Finance in 2014

4. KEY SUGGESTIONS & CONCLUSION
4.1 KEY SUGGESTIONS
The country needs to create long-term funding options for low-cost homes to make those
affordable to a vast majority of middle and low income people, recommended by World
Bank.
 The banks and non-banking financial institutions can launch ‘Contractual Housing
Savings Scheme,’ as suggested by the World Bank in its workshop on ‘housing finance
market’. Their can be proactive policies to ensure housing facilities for commoners
rather than leaving it to the spill-over effects of economic growth.
 The existing legal, regulatory and taxation frameworks should be facilitating the primary
and secondary housing finance market development. Three rates of taxes: lower tax for
low-cost housing, moderate tax for semi-luxury apartments and higher tax for luxury
apartments have to be introduced.
 A new welfare-oriented housing policy as well as affordable housing finance schemes
can be formulated as national priorities. Funds of insurance companies and provident
funds may be used to raise housing fund.
 Government should restructure the House Building Finance Corporation, the state-
owned mortgage lender, for supporting both public and private housing schemes so that
major cities, including capital Dhaka, could be saved from proliferation of slums.
 The government has to ensure availability of land, major cost of housing beside the
construction, and suggested public-private partnership with funds from multilateral
lending agencies.
 An indicative, but not exhaustive scope may be i) customization of IFC Global Mortgage
Toolkit for Bangladesh, ii) developing an Bangladesh-specific legal plan and regulatory
framework relevant to the mortgages and housing microfinance business in Bangladesh;
iii) working with the IFC and Bangladesh to develop MFI and Housing Building Finance
Corporation for low-cost financing.
 Bangladesh can plan to establish a Bangladesh based housing finance project in Dhaka,
in association with the International Finance Corporation (“IFC”) as there is an urgent
need to provide Bangladeshi home buyers with a competitively structured housing
finance product.
4.2 CONCLUSION
The demand of housing in urban areas in developing countries like Bangladesh is
dramatically increasing due to natural increase and its fast growth rate. In recent time, along
with the state owned real estate financing institutions, the commercial banks and private real
estate firms have taken initiatives to improve the real estate sector of Bangladesh in a planned
way. Their innovative idea will help to create new opportunities for the organization but their
creative ideas could not be implemented if the housing loan structure is not restructured.

References
Website:
Bangladesh House Building Finance Corporation (BHBFC)-www.bhbfc.gov.bd [Accessed
December 18, 2015].
Bank Asia Limited-www.bankasia-bd.com.[Accessed December 20, 2015].
Dhaka Bank Limited-www.dhakabankltd.com. [Accessed December 18,2015].
Delta Brac Housing Finance Corporation Ltd. (DBH)-www.deltabrac.com [Accessed
December 19, 2015].
Standard Chartered Bank -www.sc.com/bd-Standard.[Accessed December 18,2015].

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