Low-interest home loans for govt staff from November

Government employees are going to get loans at 5 percent interest rate from November, to buy houses or apartments.

Five state-owned banks and financial institutions signed an agreement yesterday with the finance division at the finance ministry's conference room in this regard, in presence of finance minister AMA Muhith.

From July 1, the government introduced a new home loan scheme for its employees who will get low-interest loans at 20-year repayment period for buying houses or apartments. The finance division issued a circular on July 31 saying any government employee under the age of 56 can get the low-interest housing loan.

At the agreement-signing ceremony yesterday, finance secretary Abdur Rouf Talukder said all 14 lakh government employees will not come under the facility in the first year.  Those who draw their salaries through automated system will avail the benefit in the first year. It will become available to all of those who want to avail it within the next two years.

According to the finance ministry official, only five ministry and divisions now draw their salaries through the automated system.

According to the circular, based on the location and grade of a government employee, they now take loans starting from Tk 20 lakh to Tk 75 lakh at an interest rate of 10 percent.

Of the 10 percent, the government will grant five percent subsidy to the interest while the employee will bear the rest. The rate of interest will be charged only on the principal amount.

In the first year, the government would require to give subsidy amounting to about Tk 300 crore to Tk 400 crore, Talukder said.

He said they have estimated that around 2 lakh employees may avail the facility, which will necessitate around Tk 900 crore in subsidies from the government exchequer.

The scheme is an exceptional initiative, the finance secretary said. The banks could invest their excess liquidity in a secured system as the loan-takers will maintain a salary account with the concerned bank. Every month the bank can adjust the installment amount from his account automatically.

On the other hand, the government subsidy will also be automatically deposited to the bank account. This will be a win-win situation where both the bank and the government employees will both be benefitted, Talukder added.

The armed forces have been included in the programme, the finance secretary said, adding that the judicial service also wants to be included, which is under consideration of the government.

The government service is now lucrative, Talukder said. In last 10 years, salary has been increased twice, and government officials up to deputy secretary level are getting car loans. Now the home loan scheme has also been introduced to remove their housing problem.

Banking Secretary Asadul Islam said taking insurance coverage should be made mandatory during granting the loan.

Managing director of Sonali Bank, Md. Obayed Ullah Al Masud said the housing business has been dull since 2012. After introduction of the scheme, the housing industry will become vibrant. About 50 types of backward linkage industries are involved with the housing sector, which will also get boost, he opined.

Additional secretary of the finance division, Md Zafar Uddin on behalf of the finance division, and managing directors of Sonali Bank, Agrani Bank, Janata Bank, Rupali Bank and House Building Finance Corporation signed the agreement.

Loans can be taken for building houses and purchasing ready-made flats. For loans taken to buy apartments, the debt-to-equity ratio will be 90:10. The payment of installments will begin after one year for building houses, and six months for ready-made apartments.