The Bangladesh Bank on Tuesday raised the maximum limit on housing finance by banks to Tk 2 crore from the previous limit of Tk 1.20 crore following demand from banks.
Banking regulation and policy department of the central bank issued a circular amending the Prudential Regulations for Consumer Financing (Regulation for House Finance).
It also informed the decision to the chief executives of all the scheduled banks operating in the country.
Banks will provide the housing finance facility at a maximum debt equity ratio of 70 per cent and 30 per cent, the circular said.
For instance, a customer will have to invest at least Tk 30 lakh to be eligible for Tk 70 lakh in home loan from banks.
To become eligible for Tk 2 crore in home loan, a customer will have to invest at least Tk 85.71 lakh as equity.
‘Considering the price hike of construction materials for housing/real estate and in the context of growing higher middle-class group, rising per capita income and increasing demand for housing, it has been decided to amend the regulation,’ the circular said.
The amendment will be made effective immediately, it added.
Earlier in 2015, the central bank had set the limit at Tk 1.20 crore and the debt equity ratio at 70:30.
The Association of Bankers, Bangladesh placed the proposal for raising the limit at a recent meeting with the central bank.
Bankers had informed the BB that they had been failing to meet customers’ home loan demand due to the Tk 1.2-crore limit set by the BB.
Real Estate and Housing Association of Bangladesh first vice-president Md Liaquat Ali Bhuiyan on Tuesday told New Age that the decision would put a positive impact on the housing sector.
Investors had long been demanding an increase in the limit, he said.
It may boost the business in the housing sector, which in recent times has been witnessing a business slowdown, he said.
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