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HDFC converted into a Housing Bank

by Jayantha Sri Nissanka and Bharatha Malawaarachchi

Amendments were brought to the Housing Development Finance Corporation (HDFC) Act to convert it to a Housing Bank yesterday.

This is with the objective of providing affordable housing loans for the homeless people in the country. Minister of Housing and Plantation Infrastructure, Arumugam Thondaman yesterday introduced the Housing Development Finance Corporation (Sri Lanka) Amendment Bill to achieve this objective.

The Bill was highly commended by members of both sides. Minister Thondaman speaking on the bill said the shortage of housing finance was observed as a major constraint to the provision of housing specially for the poor.

Therefore, the Government in its first budget recognised the need for a housing finance bank as a priority. The Minister said that the budget of 2002 has provided for affordable housing finance for low and middle income households with a monthly income in the range of Rs. 3000 to Rs. 15,000 to obtain housing loans from banks upto Rs. 500,000 with a repayment period of upto 15 years. This Draft Bill was presented for the purposes of developing the HDFC lending capacity and to attract long-term institutional savings.

"This bill will enable the HDFC as a specialised housing bank to play a major role in the housing finance sector for the benefit of the homeless people in the country,: the Minister said.

Minister Thondaman said that the HDFC is expected to enhance its volume of lending about 100% and to increase its network including the North and East provinces.

He said the HDFC will also be fully automated this year enabling it to introduce flexible new housing loan products to suit the clients needs".

Speaking on the Bill, PA MP Mahinda Amaraweera commended the Government and expressed his regret for the delay.

He said that other banks also grant loans but low and middle income earners have not benefitted. He believes that hereafter the HDFC Bank will come to assist them. Minister of Housing, P. Harrison said that the HDFC will function under Central Bank supervision. "The purpose of converting the HDFC to a bank is to help the homeless people in the country," he added.

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