HBFC

House Building Finance Corporation, the oldest housing finance institute of Pakistan, was established as a statutory federal body in 1952 with the objective of providing financial assistance for the construction of houses. Ensuingly HBFC’s scope also branched out into diverse dominions like purchase, repair and renovation of houses. Later on HBFC’s mission was evermore reformed to specifically target the needs of the low and middle income strata of the country by providing Small and Medium Housing (SMH) Solutions, hence successfully providing skilled and user friendly service at affordable costs. Over the years HBFC’s operation has flourished and is now spread over a network of 3 Regional, 12 Zonal and 58 District Offices, 4 camp offices and 25 Representative Offices/Service Agents and 21 more such offices will be opened very soon. HBFC today has its presence in 80 cities and towns all over Pakistan and is targeting to expand its business to 150 cities and towns.  HBFC’s Head office  is situated in Finance & Trade Centre Karachi.

Since inception todate, the corporation has financed over one and half million units for Rs. 41.437 billions, provided housing finance facility to 28 corporate clients for Rs. 1.7 million, made recoveries of Rs. 51.368 billions and has outstanding portfolio of Rs. 19.6 billion. Disbursed Rs. 600 millions flood loans to over Rs 0.4 million affected families granted remissions to Widows, Orphans and retired Government Servant of Rs. 1.23 billion on Federal Government’s directive. Its Average annual disbursements and recoveries are around Rs. 2-1/2 to 3 billions. It has contributed Rs. 17.149 billion towards National Exchequer in shape of payment of interest, profit and income tax to Government and State Bank of Pakistan. In 1984-85, the corporation launched Faisal Town Housing Project, at Lahore consisting of 312 bungalows and also constructed 19-storeyed Office Building named “HBFC House” Islamabad. HBFC owns prestigious Office Buildings/Premises at Karachi, Lahore and Hyderabad. It also owns valuable plots at Lahore, Islamabad, Hayatabad (Peshawar) and Hyderabad. Arrangements are afoot to construct on these plots modern commercial-cum-residential buildings, estimated to cost over Rs. one billion. Design concept of 12-16 storeyed Flat Project consisting of 208 apartments at Lahore and 12-storeyed office building at Islamabad conceptualized by M/S NESPAK stands approved by HBFC Board of Directors.

HBFC’s paid up capital is Rs. 3.001 Billion (62.5 percent ownership by the Ministry of Finance and the balance of 37.5 percent by the State Bank of Pakistan). The general directive and administration of the corporation and its affairs is entrusted to a Board of Directors and the Managing Director, who together with the assistance of Board Committee manages and controls the affairs of the corporation.

HBFC Ltd.

HBFC Ltd. which was on its way to become a corporate organization has finally been incorporated as “HBFC Ltd.’’ under Banking Companies Ordinance 1984, since July, 2007. Henceforth, Part privatization by offering share holding to firms like IFC, ADB and IDB etc is also a part of the agenda. HBFC Ltd. is also intent upon the securitization of mortgages and establishment of Real Estate Investment Trusts (REITs) and Mortgage Bonds (MBs).

To meet the upcoming corporate challenges and to cater to the growing needs of the corporation, HBFC Ltd. has taken certain drastic steps. It is enhancing its operational efficiency through preparation and implementation of manuals, computerization, human resource development and elimination of ineptness and corruption through internal controls and redesigned reward structure. In the near future HBFC Ltd. plans on expanding its outreach representative offices from 80 to 150 towns and cities. HBFC Ltd. is trying to augment its market image by having pro-active, efficient and customer friendly policies.

Thus HBFC Ltd. is paving the path for a brilliant future by amplifying its present

HBFC Ltd.‘s main aim has remained to provide Sharia compliant financing to its consumer market. HBFC’s financing schemes have also evolved over its 55 years of establishment to acquiesce with this aspiration. These schemes have propelled HBFC towards the fulfillment of its Business Focus which is to accommodate the low and middle income group’s housing needs. Thus HBFC offers a wide range of products for the ministration of its consumers. House Construction Financing, financing for purchase of house/flat, renovation of House (Home improvement financing), loan transfer and Balance transfer fund is the range offered by this organization.

At present HBFC Ltd. has following housing finance schemes in operation:

1.       “Ghar Aasan Scheme” based on diminishing Musharka, a Shariah compliant scheme under which credit for construction and purchase of houses is allowed.

2.       “Shandar Ghar Scheme” under which credit for repairs, renovation/up-gradation is available.

3.       “Loan facility for Small Builder ” for construction and sale of small houses/flats

4.       “Ghar Aasan Scheme (Flexi)” for construction, purchase and renovation for houses/flats

New up-coming Schemes

1.       Step-up-plan

2.       Savings and Loan Plan

3.       Equity Building Plan

4.       Construction Project Finance

5.       Residential Hostels Finance

6.       Home Finance for Overseas Pakistani

7.       Syndicated Finance for Large Construction Projects

The earlier schemes which were discontinued were Interest bearing scheme, Profit & Loss scheme based on income sharing and Simplified & New Simplified Schemes base on income sharing. 

HBFC Ltd. FUTURE PLANS:

HBFC Ltd. has been a household name traditionally associated with housing finance. The scenario changed with the entry of banks and leasing/house finance companies in the house finance sector from late 1990. HBFC Ltd. had reconsidered its whole business philosophy. This was rather inevitable for its survival. The new management has brought a revolutionary changes for the Corporation in all areas of its working including Operations, Human Resource, Administration, Finance, IT, etc as well as client services.

The strategic changes being initiated is expected to help HBFC Ltd. emerge as a vibrant and customer friendly housing finance institution thereby establishing more firmly its age old place in the field of house financing with a new look. HBFC Ltd. occupies a special place in the house finance business as it has all along catered to the needs of the lower and lower-middle income groups whereas the commercial banks have targets of high profile clients. Commercial Banks have a large negative list of locations as well as professions. HBFC Ltd., on the other hand does not maintain any negative list of locations or professions and it rather encourages applicants from lower income localities, as long as housing constructions are on valid land title and the client meets other minimum eligibility criteria.  Presently nearly 85% of HBFC Ltd.’s clientele is low-income people where loan amount is less than Rs.100, 000 whereas nearly 80% clients have per party loan below Rs.500, 000 and have monthly income between Rs3, 500 to Rs5, 000 and could only afford to pay an installment of Rs1000 to Rs1200 per month in 15 to 20 years besides meeting their monthly expenditure of basic necessities. For HBFC Ltd., its social role is an integral and inseparable part of its commercial stance.

Since the beginning of the year 2005, HBFC Ltd. is striving for a new outlook with a new ideology. Consequently, it has changed its Vision to “to be the prime housing finance institution of the country, providing affordable housing solutions to low and middle income groups of population by encouraging new constructions in Small & Medium Housing (SMH) sector”. Its Mission is now “to be a socially responsible and commercially sustainable housing finance institution”

IMPROVE CORPORATE IMAGE OF HBFC Ltd.:

As pointed out above HBFC Ltd. has network of about 58 branches all over Pakistan. In order to expand its outreach to the small cities and towns, HBFC Ltd. is going to set up around 50 Representative Offices where market driven techniques like appointment of service agents will also be adopted. The working conditions in HBFC Ltd. offices are being improved to show that it values and honors its clients, who are from lower and middle income sections of population and being the working class are the backbone of our economy. 

MEGA HOUSING SCHEMES FOR SMALL AND MEDIUM HOUSING UNITS:

HBFC Ltd. is actively working in association with the Provincial Governments, Corporate Bodies, Industrial Estates and Public Sector Organizations to develop mega housing schemes comprising of small and medium housing units, based on horizontal and vertical housing solutions. NESPAK is working as HBFC Ltd.’s consultant for developing such schemes. In view of the fact that the housing shortage in the country, particularly for lower and middle income groups of the population is acute and needs some mega solutions, these mega schemes have achieved paramount importance for the HBFC Ltd. Accordingly, while containing its retail housing finance products, HBFC Ltd. will focus on bulk housing schemes so that the housing stock in the country gets increased on fast track. 

HOUSING FINANCE FACILITIES TO OVERSEAS PAKISTANIS:

HBFC Ltd. would be launching an online program for the overseas Pakistanis to facilitate them in owning a house in Pakistan where, on their return, they could live or earn reasonable return by putting the same on rent. For availing this facility they do not need to visit HBFC Ltd. office as every thing would be arranged on website and the overseas Pakistanis would have direct contact with the HBFC Ltd. offices specifically designated and equipped with all the required information for the scheme.

HBFC Ltd. will provide financing facilities as well as “property related service”, which include help in locating suitable residential locations with detailed information on lists of properties available, classified by location and price with detailed specifications. Subsequently HBFC Ltd. would be providing them with additional services such as evaluating the reliability of developer, perusal of the legal documentation, periodic visit to the project’s site, helping them to determine initial down payment for booking and assist them in completion of purchase transaction.

OTHER HOUSING SCHEMES:

Other schemes include schemes where experience of Korangi Township can be replicated. Such scheme is considered as among the best housing solutions to rehabilitate squatters/poor people., Provincial Governments are being approached with a proposal to earmark a piece of land in suburbs of major cities starting with provincial capitals for building houses for low income group of population.

PAYMENT OF STATE BANK OF PAKISTAN CREDIT LINES:

Consequent to the direction of the Central Government to make the Corporation a self-sustained institution, all out efforts were directed towards achieving this objective. Despite of the fact that no fresh credit lines from SBP were available since 1992, HBFC Ltd. has been able to make following repayments to SBP by the due dates:

No payment after 15 January 2005 as in Treasures Department. 

The remaining amount of Rs. 1.243 billion is to be repaid over the next seven years with last payment is due in the year 2012. HBFC Ltd. expects itself to honor its obligation without much difficulty.

FIRST TFC ISSUE OF RS. 300 MILLION:

As a first step towards becoming a self sustained institution, HBFC Ltd. arranged a privately place TFC of Rs.300 million with M/s Pak-Libya Holding Company (Pvt) Ltd for 3 years on November 5, 2003. The repayment of TFC was to be made in 12 equal quarterly installments of Rs.332.58 million (mark-up plus principal) each.  HBFC Ltd. has since paid all 12 such installments up to November 2006 on due dates. In view of this good track record of timely repayment, image of HBFC Ltd. has improved and it would help the Corporation in obtaining future finances on attractive terms.

LONG/SHORT TERM CREDIT RATING MAINTAINED:

HBFC Ltd. has succeeded in maintaining long term (A) and short term (A1) credit rating for the third consecutive year. These rating are indicative of strong capacity for timely repayment and low expectation of credit risk.

These ratings have been assigned by the PACRA, the leading credit rating agency of Pakistan. These ratings have been awarded on the basis of a steady improvement in organizational performance particularly in disbursements of “Ghar Aasan” and “Shandar Ghar” Schemes and timely repayment of our obligations.

With new initiatives underway, improvements in credit rating are expected in future years.