DBH Finance PLC is the only private-sector lender dealing exclusively with home loans. For more than 25 years, the company has been assisting prospective home buyers to fulfil their accommodation needs. Targeting the middle-income group of customers, the company is spreading its products and services across the country.
In a recent interview with The Business Standard, Nasimul Baten, managing director and CEO of DBH Finance PLC, elaborates on his organisation's loan policy and how it is helping clients buy their dream homes.
What are the requirements for getting a loan from your company?
Any citizen of Bangladesh having a residential housing need can apply for a home loan from DBH Finance PLC. We do not have any minimum income threshold to qualify for a home loan. It depends on the loan amount and repayment capacity of the client to service the monthly instalment for that amount.
For example, affordable housing loan clients may consider taking a loan of Tk20 lakh from us, where their monthly instalments will be less than Tk20,000 per month. If they have savings to pay that instalment from their income after meeting up their family expenses and other obligations, they can easily qualify for the loan.
In terms of documentation, NID and updated income tax return is now mandatory to take any loan from banks or financial institutions. In addition, the client will have to provide employment or business related documents, income documents and property documents to apply for the loan.
DBH assesses the repayment capacity by looking at multiple factors, such as clients' income, age, qualifications, number of dependents, spouse's income, assets, liabilities, stability, continuity of occupation, payment behaviour of other loans and savings history.
While providing a home loan, DBH wants to ensure that the client can comfortably and regularly repay the monthly instalments. DBH finances up to 80% of the property value and can finance for a maximum duration of 25 years.
How long do you take to disburse a loan?
After a client applies for a home loan with all required documents in the prescribed application form, we process the application for credit approval to see client's repayment capacity of the loan, conduct legal vetting to see the ownership documents are in place to ensure clean title, and also conduct technical assessment to ensure ownership, physical possession, work in progress and valuation of the property.
The three approval processes are conducted simultaneously. Once the approvals are done, generally within one to two weeks, the disbursement takes place based on requirement of the client and also based on work in progress of the property. For near-ready property, the fund is disbursed at one go and for under construction property, the fund is disbursed in multiple tranches.
What is your housing loan interest rate?
From 1 July 2023, the Bangladesh Bank lifted the fixed lending rate cap and made the interest rate market driven by benchmarking it against SMART (six-month moving average rate of treasury bills). Bangladesh Bank publishes the SMART rate on its website at the beginning of the month and banks and financial institutions set their rates according to that guideline.
DBH is also working under the same framework and revising rates according to those guidelines. According to the guideline, once a rate is revised for a customer, it will remain the same for the next six months regardless of any changes in SMART.
Rate of interest also differs for factors like loan scheme, purpose, amount, profile, etc. For example, for the housing loan scheme for government employees, which is a scheme of the Ministry of Finance, and DBH is enlisted as one of the implementing organisations for that scheme, the rate of interest is 9%. For other schemes, our rate generally varies from 10% to 11%.
What is the maximum term of the loans you are giving out?
DBH offers a maximum tenure of 25 years, but clients have the option to choose shorter terms based on their convenience and repayment capacity. However, the initial duration of the loan depends on the age of the client. Clients also have the option to prepay the loan in part or full and reduce monthly instalments or loan duration.
Is your business only in Dhaka and Chattogram?
Earlier, real estate development in our country was mainly focused in Dhaka and Chattogram and our business was also focused in those areas. But with the growth of the economy and increase of per capita income, housing development has spread all over the country in recent years.
Now we have 14 branches in Dhaka, Chattogram, Rajshahi, Khulna, Rangpur, Sylhet, Cumilla, Gazipur, Savar, and Narayanganj and we are gradually opening more branches to increase our coverage, particularly for the affordable housing segment.
DBH, with its core focus in housing finance, has disbursed in excess of Tk14,500 crores to more than 55,000 families in the last 25 years.