The rural housing loan scheme, introduced by Bangladesh House Building Finance Corporation (BHBFC) in July, got off to a flying start due to the huge demand for high-rise residential buildings in the face of economic development.

In the four months since its introduction, loans amounting to Tk 72.36 crore were sanctioned, which is 60.50 percent of the total home loans approved by the BHBFC during the period.

The demand for loans was particularly high in the northern region of the country. Some Tk 9.14 crore was disbursed in the Rangpur zone, which is the highest, followed by Rajshahi at Tk 5.66 crore.

The BHBFC is offering a comparatively lower interest rate for rural clients to encourage them to take loans. The interest rate for rural areas is 8.5 percent in contrast to 9.5 percent for the Dhaka and Chittagong metropolitan areas.

The loan ceiling for rural borrowers is Tk 60 lakh. “The remittance inflow has boosted the rural economy, prompting the village people to build their houses by taking loans,” said Debasish Chakrabarty, managing director of BHBFC.

The low interest rate is also a great attraction to the rural people, he said. The huge demand for housing loans from remote areas has prompted BHBFC to take house building finance from the Islamic Development Bank.

The IDB will provide Tk 864 crore to BHBFC, the interest rate of which will be 8.5 percent or lower, according to Chakrabarty.

“BHBFC has already fulfilled the conditions imposed by the IDB for getting the loan,” he said, adding that IDB's president will come to Bangladesh in January to finalise the deal. Earlier in October, BHBFC sought Tk 500 crore from the Bangladesh Bank to accelerate its loan disbursement activities.

The central bank had declined to provide the fund due to inflation risk; it instead advised BHBFC to take the funds from the government. The BB has also called upon private banks to disburse their home loans in rural areas through BHBFC.