BB raises NRBs' home loan debt-equity ratio to 75:25

Posted by BankInfo on Mon, Jul 24 2017 10:04 am

The non-resident Bangladeshis (NRBs) can obtain housing finance facility at a maximum debt-equity ratio of 75:25 instead of the existing debt-equity ratio of 50:50.

Bangladesh Bank (BB) issued a circular in this connection on Sunday.

Bankers at a roundtable on Thursday urged the government to allow a debt-equity ratio of 80:20 for home loan to the NRBs, so that they show more interest to invest in home building in the country.

They said it would also help to boost inward remittance. On December 06, 2015, BB issued a circular on facilitating the NRBs to purchase apartment or land through taking loans in Bangladesh currency.

The circular, issued by its Foreign Exchange Policy Department, said Authorised Dealers (ADs) may extend mortgage loans in Taka to the NRBs working abroad for housing purpose of in Bangladesh.

The home loan would be issued in line with the existing guidelines on Prudential Regulations for Consumer Financing, issued by Banking Regulation and Policy Department, it also said.

The housing finance facility would be provided to the NRBs at a maximum debt-equity ratio of 50:50, which means that a bank will give Tk 50, if an expatriate deposits Tk 50 against the loan.

The equity portion would be provided by the borrower or the NRBs, either through their inward remittance or through debits to their non-resident bank accounts fed by foreign sources.

The ADs may obtain securities and savings instruments, held by NRBs in Bangladesh, as additional collateral beside registered mortgage of the house with registered power of attorney.

The repayment against the loans would be made out of inward remittance. BB has asked the scheduled banks to develop Product Programme Guidelines for the NRBs' housing finance.

News:Financial Express/24-jul-2017
Posted in Banking, News