IFIC steps into home financing with a bang

Shah A Sarwar

IFIC Bank that entered the burgeoning house financing market just a year ago with a focus on affordable home loans aims to disburse Tk 1,000 crore in credit this year.

“We initiated the home loan product early last year, but aggressively pursued it from July,” said Shah A Sarwar, managing director of the bank that already disbursed Tk 400 crore in the first half of this year.

The home loan is a necessary product, but its cost was high in the market. “So, we introduced the loan with an almost single digit interest rate last year, as we wanted to make a breakthrough,” he said.

The interest rate was 11.95 percent, when the bank first introduced the home loan as a separate banking product; now the rate is 9.99 percent.

“Home loans should be the primary product, if we want to provide banking services to the people of Bangladesh,” he said.

“If you want to bring people under banking services, there is no alternative to home loans,” Sarwar said, adding that it is the most secured product in the market.

There are no hidden costs in the home loans provided by IFIC, he said. “It may be that many institutions are charging an interest rate below 10 percent; but they are imposing other fees and charges or insurance premium in such a way that the rate goes over 10 percent,” he said.

Any client can take home loan from any of its 130 branches across the country. “We are not focused on only Dhaka or Chittagong. We are encouraging all to take loans from any branch,” he said.

IFIC Bank can take decision on a home loan within 72 hours, and can provide the loan as soon as the clients provide the required documents.

However, there are some challenges, said Sarwar, like keeping the cost of fund and cost of processing at a low level, and timely delivery of the loan.

Banks' business model has to be changed to overcome the challenges, he said. “We are developing our business model, reorganising our HR focus and branch layouts to overcome these. It's a challenging task and cannot be done overnight,” he said.

IFIC was listed on the stockmarket in 1986. Its net profit stood at Tk 105.71 crore at the end of 2015 and basic earnings per share of Tk 2.1, down from Tk 176.5 crore (restated) and Tk 3.51 respectively a year earlier.

Sponsors own an 8.48 percent stake in IFIC, the government 32.75 percent, institutional investors 22.17 percent, foreign investors 0.42 percent and the general public 36.18 percent.