Real Estate Financing in Bangladesh: Problems, Programs, and Prospects

18 Pages Posted: 16 Jan 2008 Last revised: 9 Apr 2011

See all articles by Maksud R. Sarker

Maksud R. Sarker

American International University-Bangladesh

Mohammad Siddiquee

Sheikh Feroze Rehan

Daffodil International University - Department of Business Administration


Housing not only provides physical shelter but also have significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self-confidence and human dignity. Considerable research interest is attached to the question of how the acquisition of residential real estate has been financed. Bangladesh, like many other developing countries face an acute shortage of affordable housing both in the urban and rural areas. The main constraints in housing production are the unavailability and high cost of housing finance in relation to household incomes. The present housing finance system in Bangladesh is extremely small and highly segmented. Besides the state-owned BHBFC, other sources of housing finance currently available in Bangladesh are commercial banks, employee loans, life insurance policies, informal means (such as own savings, contributions from relatives, friends or employers, or short-term money-lenders), and housing co-operatives in the rural sector. Recently, private housing finance institutions (such as Delta-BRAC Housing Finance Corporation Ltd. and the National Housing Finance and Investment Ltd.) and non-bank financial institutions (such as IDLC of Bangladesh and MIDAS Financing Ltd.) have started to operate in this market targeting middle income households. Several micro-finance institutions (such as Grameen Bank, Proshika, BRAC, and ASA) have extended non-collateralized credit to a small proportion of poor rural households. The performance of all the sources is not up to the mark as a whole. The government has to assess and decide on a number housing financing policies to improve the national housing situation, such as introducing a National Home Lending Program (NHLP); redirecting housing subsidies; increasing lending recovery rates by BHBFC; expanding the primary mortgage market; rehabilitating BHBFC; adopting a legal and regulatory reform program to safeguard lenders; enhancing lending in rural areas through village micro-credit schemes; and improving the climate for attracting finance to the housing sector.

Keywords: Real Estate, real estate financing, interest rate subsidy, subsidy targeting, mortgage market

Suggested Citation

Sarker, Maksud R. and Siddiquee, Mohammad and Rehan, Sheikh Feroze, Real Estate Financing in Bangladesh: Problems, Programs, and Prospects. Available at SSRN: or

Maksud R. Sarker

American International University-Bangladesh ( email )

House 83/B, Road 4, Kemal Ataturk Avenue
Dhaka, Dhaka 1213


Sheikh Feroze Rehan

Daffodil International University - Department of Business Administration ( email )

102 Shukrabad, Mirpur Road
Dhanmondi, Dhaka-1207


No contact information is available for Mohammad Siddiquee

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