Housing project for low, middle income groups in the offing

The government is going to launch a rural and urban housing project with low-interest loans for low and middle income groups.
Islamic Development Bank has agreed to lend about Tk 800 crore ($100 million) under the project to be implemented by House Building Finance Corporation through its countrywide network, a senior finance ministry official said.
The economic relations division of the finance ministry held series of meetings with the bank in the last six months to finalise the terms of the loans, targeted clients and issues pertaining to the interest payment of the credit, he added.
The final deal would be signed by December, a top financial official said.
Under the proposed loan agreement, the government will provide a sovereign guarantee to the bank and open an Islamic window at corporation.
The loan would involve a 3.25 per cent service charge and it would be refunded in 15 years with a five-year grace period.
The corporation would lend the loan at lower than market rates so that middle income group might afford to get the loan, which would be 80 per cent of the total building construction cost. The loan would be applicable for any place beyond the metropolitan areas of Dhaka and Chittagong, officials concerned said.
The ministry official said that the loan would be disbursed in a five years, particularly in districts, upazellas and growth centres, where traditional banks took little interest in lending in housing schemes.
Only land owners will be eligible for the low-interest loan to be repaid in 15 years, according to the project proposal, sent to the bank by the economic relations division.
Nearly 1,000 multi-storied houses could be built countrywide with the loan, a feasibility study of the corporation said.
Finance ministry officials said that they were keen to arrange fund for the corporation as the government had limitations on extra-budgetary fund allocation for the state-owned corporation.
Currently, the corporation has only little over than Tk 100 crore paid-up capital.