The BRAC Bank is going to launch the country’s first housing bond in association with the International Finance Corporation (IFC), a press release said Tuesday.
IFC will make a subscription of up to $50 million-equivalent Bangladeshi taka denominated, five-year senior bond by BRAC Bank to fund and expand its affordable housing finance program. The move is expected to create thousands of new jobs in construction and related industries.
It’s estimated about 80 percent of people in Bangladesh’s cities live in rented properties all their lives, mostly due to lack of mortgage finance. Home mortgages only account for three percent of the loan market in Bangladesh, below the average of 4.9 percent in South Asia and 8.9 percent in emerging markets. Most financial institutions focus on providing housing finance to the higher-income people, while access to formal housing loans forlowand middle-income segments is very limited. This causes a surplus in premium housing and a shortage of both housing finance and housing units for low and middle-income people.
“This marks a whole new strategic priority for BRAC Bank, since our establishment in 2001, with our goal then to improve access to finance for underserved small and medium enterprises.We, along with IFC, recognize that far too many low and middle-income earners simply cannot access the funds they need to buy a home. Now people of semi urban areas can also fulfill their dream of owning a house with our affordable home mortgage facilities,” said Selim R. F. Hussain, BRAC Bank Managing Director and CEO.
Through this initiative, IFC and BRAC Bank jointly aim to demonstrate a commercially viable lending product that caters to the housing finance needs of households belonging to low and middle-income household,promote inclusive development and create thousands of new jobs.
