1.Please give us an overview of House Building Finance Company?

House Building Finance Company (HBFC) started off as House Building Finance Corporation in 1952 fully owned by the government under an Act of the Parliament that was converted into an unlisted public company in 2006-07. We are the only public sector housing finance company in Pakistan. HBFC has given out about 450,000 loans since inception through 50 branches across the country. HBFC is the only company in the mortgage market that caters to the lower middle-income strata of the economy. For over a year now, we are in the process of revitalizing the organization. I joined this company in late 2017 and we have built a new team most of who are from the private sector. Our mission is to provide housing finance particularly to low and middle income segments of the country while at the same time remaining commercially sustainable. We offer both Islamic and conventional modes of financing; the conventional product “Ghar Pakistan” that we launched in January this year is the first affordable fixed rate mortgage project in the country designed for the low and lower middle income strata. Anyone having an income of up to Rs.100,000 a month is essentially eligible for a loan under this scheme and the loan is provided at a fixed rate of 12% per annum for the life of the loan, which can vary from 3 to 20 years. The main motivation behind launching this product was to provide an affordable fixed rate mortgage for the low and middle income segments of the country that would provide them certainty in repayment plan while safeguarding from future increases in interest rate. We are also aligned with the Prime Minister’s Naya Pakistan Housing Program and as soon as the projects under that flagship program are launched, we will also establish our footprint in those areas and try to capture as much of the market as possible.

2. Housing Finance has seen an impressive growth in the few years and Imran Khan has promised to build 5 Million houses for the low-income segment of society. Please give us your output of the housing banking space in Pakistan and how can it be improved?

Currently there is a shortfall of nearly 10 million housing units in the country whereas housing finance is just 0.25% of the GDP. Moreover, most of the banks shy away from mortgage business particularly low income stratum for a variety of reasons. Under the Prime Minister’s Naya Pakistan Housing Program, a number of policy and regulatory measure have been taken to improve the state of housing finance in Pakistan. These measures include introduction of schemes for refinance to facilitate availability of long term affordable funding for housing whereby credit lines are being provided to the financial institutions for low-cost housing and special segments i.e. widows, families of deceased during war on terrorism, disabled and transgenders. Moreover, government has also introduced tax incentives for financial institutions on the income whereby tax rate has been reduced by almost half from 39% to 20% on the income the financial institutions will earn from investments in low-cost housing. The government is also partnering up with NGOs for different housing schemes whereby the government will provide funding of up to 5 billion rupees to NGOs and they will build houses fulfilling certain parameters. These houses will then be provided to the target market against interest free loans.

All these developments are very encouraging and will help HBFC in realizing its vision of providing affordable housing finance to low and middle income groups of population by encouraging new constructions in small and medium housing (SMH) sector.

3. House Building Finance Company is Pakistan’s leading housing finance institution, it was incorporated in 2006. You offer services for home financing in every part of the country including construction and purchase of house. What are your objectives for 2019?

We are gearing up to tackle the challenge being offered by the government of Pakistan to offer low-cost housing and expand the mortgage market. In addition to our own equity, we have also resources available from the Pakistan Mortgage Refinance Company for financing in the low and middle income segments. As earlier mentioned, in this regard we have recently launched “Ghar Pakistan” scheme focused on middle and low income segments of the society whereby customers having income less than Rs.100,000/- and fulfilling other criteria can be granted a loan of upto Rs.2,500,000/- at fixed rate of 12% per annum for a period of 3 to 20 years. In 2019, we are also working on a number of other housing finance products that will help us in meeting varying requirements of our potential customers in a sustainable manner and address housing finance needs of the society in a more focused manner.

4. What current projects are you working on? Do you have any expansion plans?

We are trying to revive our inactive branches in 2019. We have about 50 branches out of which 44 are operational. Secondly, we want to enhance our outreach by approaching our target customers through sales force. We are currently boosting our sales team in order to increase our outreach and customers.

5. You have a very strong presence in Housing Finance. Are you looking to diversify your services into other sectors? What differentiates House Building Finance Company from its competitors such as Askari Bank?

HBFC no doubt has the edge over other FIs in the mortgage market and we are the only housing finance institution that provides financing for the low and lower middle-income groups. We are taking measures to fortify our position. We are exploiting the high end mortgage market to diversify our products as well as our market and credit risks.

6. How important is the digitalization of services for House Building Finance Company? What are you doing to improve them?

We want to digitalize our processes in every possible way. We are in the process of undergoing a major digital transformation internally and very soon we are going to have a major revamp. New loan management system along with treasury, general ledger and HR functions will be put in place. For the digitalization process we are not moving step by step, instead we are taking quantum leaps to ensure complete transformation in minimum time duration.

7. How important is CSR for House Building Finance Company? And in which CSR projects are you involved in?

Our “Ghar Pakistan Scheme” under which we are providing house loans at fixed interest rate of 12% is part of our CSR because at the moment the interest rates of other institutions are much higher and more importantly no other financial institution is providing housing loans to this segment of the society. As soon as our new loan management system is in place we will offer our eligible customers a balance transfer facility, this will allow them to move from high floating rates towards lower fixed rates in a convenient manner. We are also working with the State Bank of Pakistan on the refinance scheme and plan to offer special products to teachers and working women. We are also looking to offer low-cost housing products to both government and private corporations.

8. What is your final message to the readers of USA Today who consider Pakistan as a potential investment destination or are looking for partnerships in the housing banking sector?

Pakistan’s market has unparalleled potential. If US investments come in technology, low-cost housing solutions, smart houses and innovative financial products, I am absolutely sure that they will reap very good dividends because the market is still largely untapped. The demand is huge but unmet and US companies will achieve great returns on investments in this country.