KARACHI, Aug 12: The House Building Finance Corporation (HBFC) will expand its reach to small cities and towns by opening up around 60 representative offices to be given on franchise and will be empowered to accept and process loan applications. The corporation which so far kept its loaning facilities restricted mostly to urban areas is now going to reach small cities and towns in order to cater to the needs of small and medium housing finance required by low income groups.

In a well-thought out policy the HBFC has totally changed its loaning strategy and now its target client is no more of a posh locality but a low income person who has cultural inhibition with commercial banks which normally give high profile look to their branches and use ultra modern publicity exhibits. Under first stage the HBFC will open offices and also give franchise in 50 small cities and towns by opening 60 new branches to expand its reach towards low income groups all over the country.

Similarly, the corporation has chalked out a special assistance programme for overseas Pakistanis who normally confront problems due to lack of information will be given services which will help them to take correct and prudent decision with regard to their investment in real estate projects. The HBFC will put all big projects which are legally and commercially sound on its website so that overseas Pakistanis could directly apply and book their chosen flat or housing unit. After getting 30 per cent down payment from the applicant the corporation will approve the balance of 70 per cent for the selected project. However, it will take nominal charges for providing such services.

HBFC Chairman and Chief Executive Zaigham Mahmood Rizvi told Dawn that this facility would not only ensure safety to the investment coming from overseas Pakistanis but would also enhance remittances.

He said that housing industry had a potential of Rs3.5 billion per annum but presently loaning capacity is less than 6 to 7 per cent. Similarly there was a tremendous scope for mortgage but in Pakistan it stood at 2 to 3 per cent of the GDP whereas in India it was around 6 to 7 per cent and in the United States it was over 55 per cent.

“The government has stopped to provide financial support to the HBFC and has directed it to programme and raise its funds from market,” Mr Rizvi said and added that the corporation was working on several options including issuance of Real Estate Bond also known REIT bonds.

Responding to a question, he said the HBFC balance sheet was of a size of Rs22 billion but a huge amount of Rs11.5 billion belong to bad portfolios. However, he said the corporation had undertaken aggressive recovery campaign from January 1 this year to recover these loans.

He further said that presently two settlement packages had been announced by the government to provide relief to widows and to defaulters of loans. Around 60,000 would be benefiting from this package. However, he categorically said that there was no role for agents or middlemen to finalize such deals.