Restructuring of HBFC will create opportunities for lower income people to avail housing finance facilities, leading to growth in the construction sector. PHOTO: FILE
KARACHI: Reacting to the government’s pledge to revive the red tape-ridden House Building Finance Company in the next fiscal year, the construction industry has expressed hope the mortgage-to-GDP ratio may increase substantially with the rehabilitation of the country’s largest housing finance institution.
According to the State Bank of Pakistan, HBFC is the country’s only institution extending housing finance to the lower-middle and low-income groups. It suffers from corporate governance issues, such as the absence of a functional board of directors, and corruption at least at the middle and low levels.
Speaking to The Express Tribune, Association of Builders and Developers (ABAD) Senior Vice Chairman Saleem Kassim Patel said the body appreciates the proposed restructuring of HBFC, which will create opportunities for the middle and lower-middle income groups to avail housing finance facilities.
HBFC’s non-performing loans (NPLs) decreased from Rs7.9 billion to Rs6.8 billion in 2013, as per data compiled by the SBP. However, the share of NPLs in its total gross outstanding housing finance is the highest after foreign banks (55%). HBFC’s share in industry-wide NPLs stood at 42.7% at the end of 2013.
“The government should constitute the HBFC board by including members from all stakeholders, including ABAD,” the ABAD representative said.
Although Dar’s speech on Tuesday lacked specific details about HBFC’s revival plan, Patel claimed the government has accepted almost all proposals put forward by the builders and developers of Pakistan.
Published in The Express Tribune, June 5th, 2014.
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