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House Building Finance Corporation (HBFC) - Lahore_Real_Estate - 03-10-2010 12:19 PM
House Building Finance Corporation (HBFC) Has Put An Embargo On Loan Disbursement To Housing Projects Which Has Resulted In Delay In Completion
Published on March 09, 2010 Comments (Be the first)
by Association of Builders and Developers of Pakistan
(Asianet-Pakistan and OfficialWire)
KARACHI, PAKISTAN
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The House Building Finance Corporation has put an embargo on loan disbursement to housing projects which has resulted in delay in completion and if the Housing Project Zone of HBFC is not provided Rs. 2 billion on urgent basis, a complete stoppage of construction activities is imminent.
This was stated by Engr. Farooq-uz-Zaman Khan while talking to journalists. Billions of rupees of the public and builders are stuck up in these projects. If HBFC fails to provide the required housing finance, it is feared that the real estate and construction sector will face the same fate as that of Dubai, resulting in increased unemployment and other social problems, said Farooq-uz-Zaman.
The difficult policies initiated by HBFC are impossible to comply with and have made it impossible to acquire housing finance. In the last financial year HBFC financed to the tune of Rs. 3.8 billion whereas in the current year a negligible amount of Rs. 700 million is disbursed.
The new management of HBFC has no clue about the predicaments faced by the poor segment of our society and is replicating the policies of commercial banks and are trying to implement model of Singapore and Malaysia. The requirements have been made complicated and impractical.
As per the new verification of income policy, income of all members of a household is required to be verified and on each verification case Rs. 5000 fee is levied. On the project policy file the processing fee is increased to Rs. 500,000. Even those allottees in a project, who are not interested in acquiring loans, are asked to provide the original ownership documents. Of the total number of 50,000 cases of HPZ, recoveries have been made in 35,000 cases and only 15,000 cases are active. The only exemption provided is to widows and on these cases to the payments to HBFC are being made.
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During the last 4 years HBFC has recovered Rs. 17 billion and in the year 2008 recoveries have amounted to Rs. 3.2 billion whereas in the year 2009 Rs. 3.6 were recovered. In the years 2005-2008 a total amount of Rs. 10 billion were recovered and in the last two years Rs. 6 billion have been recovered.
Answering a question Chairman ABAD said there is a shortage of 8 million housing units and keeping in view the loaning profile of HBFC it seems that the back log of housing units would never be wiped out.
Vice Chairman ABAD Muhammad Arif Siddiq said HBFC has stopped loan disbursement to public projects. The corporation is following the policy of commercial banks, sidelining the redressal of difficulties of the public.
Chairman ABAD-Southern Region Saleem Kassim Patel said the percentage of Non Performing Loans (NPL) is declining. The pattern of NPL in HBFC is different from that of commercial banks. In housing finance, all loans are backed by a collateral or mortgage. Post dated checks are acquired from the client and the corporation has right to take over the property to recover the loan. He added that in 2004 the NPL of HBFC was 67% which has gone down to approximately 37% now.
ABAD suggested to the Government that State Bank of Pakistan and HBFC should be provided structural and financial support in order to improve the capabilities of HBFC. The policies of HBFC should be made public friendly. Instead of providing loans to upper and high income segment, the target should be the lower and middle income group. Steps should be taken to improve the Mortgage to GDP ratio.
HBFC should implement a policy of decentralization and the regional chief should be empowered to approve loans at district level. The target set for providing finance should be achieved at all costs. An effective mechanism for recoveries should be made so that the problem of shortage of funds is solved.