Comparative Analysis of the Characteristics of Loan Products (Home Loan) of Different Banks in Bangladesh.

Introduction: The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system consists of four nationalized commercial Banks, around forty private commercial banks, nine foreign multinational banks and some specialized banks. In Bangladesh, there are different commercial banks that provide home loan to facilitate quality services to customers, to set high standards of integrity. The home loan provided by the banks increases the opportunity of the people to make their own home.

The 10 commercial banks we have analyzed who provide home loan in our country: Eastern Bank Limited Eastern Bank Limited (EBL) is one of the modern, fully online and technologically superior private commercial Banks in Bangladesh. Eastern Bank markets a wide range of depository, loan & card products. These products include different types of Savings & Current Accounts, Personal Loans, Auto Loan, Debit Card, Pre-paid Cards, Internet Banking, Treasury, Syndication, Corporate Banking and SME Banking services through a network of branches & centers countrywide. Trust Bank Limited Trust Bank Limited is one of the leading private commercial bank having a spread network of 39 branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2008. The bank, sponsored by the Army Welfare Trust (AWT), is first of its kind in the country. With a wide range of modern corporate and consumer financial products Trust Bank has been operating in Bangladesh since 1999 and has achieved public confidence as a sound and stable bank. 2

Dhaka Bank Limited A group of highly acclaimed businessmen of the country grouped together to responded to this need and established Dhaka Bank Limited in the year 1995. The Bank was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 100 million. Dutch Bangla Bank Limited Dutch-Bangla Bank started operation is Bangladesh's first joint venture bank. The bank was an effort by local shareholders spearheaded by M Sahabuddin Ahmed (founder chairman) and the Dutch company FMO. DBBL was the first bank in Bangladesh to be fully automated. The Electronic-Banking Division was established in 2002 to undertake rapid automation and bring modern banking services into this field. Full automation was completed in 2003 and hereby introduced plastic money to the Bangladeshi masses. Bank Asia Limited Bank Asia Limited is a scheduled commercial bank in the private sector established under the Banking Company Act 1991 and incorporated in Bangladesh as a public limited company under the Companies Act 1994 to carry out banking business in Bangladesh. IFIC Bank Limited International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the Peoples Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of

working as a finance company within the country and setting up joint venture banks/financial institutions abroad. The Government held 49 per cent shares and the rest 51 per cent were held by the sponsors and general public. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a full-fledged commercial bank. Mutual Trust Bank Limited The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a Public Company Limited by Shares for carrying out all kinds of banking activities with Authorised Capital of Tk. 38,00,000,000 divided into 38,000,000 ordinary shares of Tk. 100 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. Shahjalal Islami Bank Limited Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in accordance with principle of Islamic Shariah on the 10th May 2001 under the Bank Companies Act, 1991. During last eight years SJIBL has diversified its service coverage by opening new branches at different strategically important locations across the country offering various service products both investment & deposit. Standard Chartered Bank Standard Chartered Bank started its business in Bangladesh in 1948, opening its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country's thriving economy. At present the bank has 6 offices in Dhaka Chittagong and Sylhet, including the country's only offshore banking unit inside the Dhaka Export Processing Zone at Savar.

HSBC Opened first Bangladesh branch in December 1996. Network of 10 offices: 9 branches, 1 sub-branch and an offshore banking unit, 830 employees as of 31 December 2008. Key business areas: Personal Financial Services, Commercial banking, Corporate and institutional banking.

Features of Home Loan in different banks:

Dutch-Bangla Bank Limited

Home Loan
Home loan is for purchasing of old or new house/flat, construction of apartment or house, renovation/alteration/extension of existing house/flat and takeover of existing housing loan from other bank or financial institution. Loan Range: BDT 200,000/- to BDT 5000, 000/- or maximum 70% of the asset value, whichever is lower. 5

Interest rate: Competitive Tenor: 1 to 5 years. Repayment: Equal monthly installments. Partial Repayment: Allowed. Early Full Settlement: Allowed any time. Monthly Installment Size: Based on interest @ 15% p.a.

1 year Loan amount 200,000 18052 500,000 700,000 1000,000 1500,000 2000,000 2500,000 3000,000 3500,000 4000,000 4500,000 5000,000 45130 63181 90259 135388 180517 225646 270775 315905 361034 406163 451292

3 years 6934 17333 24266 34666 51998 69331 86664 103996 121329 138662 155994 173327

5 years 4758 11895 16653 23790 35685 47580 59475 71370 83265 95160 107055 118950

10 years 3227 8067 11294 16134 24201 32267 40334 48401 56468 64534 72601 80668

15 years 2800 6998 9798 13996 20994 27992 34990 41988 48986 55984 62982 69980

Home Loan Scheme

A dream of own home and to make the dream come true, this is a home loan project. Thinking of the general people, this loan has been framed and the conditions are easy and hassle free.

Objective Apartment or house purchase. Construction of new house. Eligibility for taking loan Salary paid executive/service holder/businessman/government officer Loan Amount Maximum BDT 5000,000/-

Tenor 60 to maximum 180 months at equal monthly installment. Grace Period Benefit of 6 to 12 months grace period. Collateral Flat/house/purchased lands registered mortgage and other charge documents needed. Interest Rate Attractive interest rate applicable.

Housing Investment Project

Shahjalal Islami Bank has started Housing investment project for the mid income level people to give them benefit of own home. Characteristics of Housing Investment Project Objective

 To spread out the benefit of this project amongst different class of people. To minimize the existing housing problem of the country. To give opportunity of housing to limited earning people. To help the people in Islamic way and expanding investment. Eligibility Serving defense officer. Permanent faculty of college and university. Degree owned doctor, engineer and established service holder. Government, semi-government, privatized and reputed private organization, multinational company, NGO and reputed private organizations permanent employee. Wage earners. Banks existing good customers. Subscribers age will not exceed 65 years.

Loan Amount Maximum BDT 7000,000/ Incase of purchase new apartment/house, bank will bear 70% of the total amount, rest of the amount will be paid by subscriber. Incase of purchase old house/apartment bank will bear 50% of the total amount, rest of the amount will be paid by the subscriber. Incase of constructing new house, bank will invest 60% of the total amount, rest of the amount will be paid by the subscriber. Tenure 1 to maximum 20 years.

Interest Rate Information of existing interest rate and other charges are available in any branch of the bank. For regular and timely payment 1% rebate will be given. Investment Policy Hire purchase under Shirkatul Milk Collateral Building with land (if the building is made on land). Apartment/Flat. Other collateral which will give priority to approve investment.

Installment Payable at an equal monthly installment. Target Area Initially at Dhaka, Chittagong and Sylhet. Further the other parts of the country will be included in the project.

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Standard Chartered Mortgage Home Loan? To realise your dream home.

Loan amount includes registration cost No cash security No personal guarantee from third party Interest calculated on Monthly Reducing Balance

Everyone dreams of a sweet home. And this dream comes true with a little effort. Standard Chartered is ready to help you in this effort so that your dream comes true. Be it your first home or renovating/refinancing your existing one, or a second one, you can avail our Mortgage Home Loan ?the best home loan in town.

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Standard Chartered Mortgage offers you

Competitive interest rate with no hidden cost. Interest calculated on a monthly reducing balance, which enables you to save money in your installment amount Simple & easy documentation No personal guarantee from third party and no additional cash security Flexible loan amount Refinancing Financing includes registration cost Partial or full prepayment options Loan approval within the shortest possible time.

Who can apply? Profession: Applicant should have at least three years of service/ professional/ business track records. Minimum Age: 30 years. Maximum Age: Retirement age or 60 years less loan term, whichever is earlier. Proposed Property: Any leasehold residential property including purchase of second hand property. Easy Terms and Repayment Option

Maximum loan term up to 15 years Repayment: Loan will be repaid by equal monthly instalment (EMI) and the installment is calculated on monthly reducing method with no additional hidden interest or charges

Convenient Security

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Registered mortgage of the property or any other equivalent property in favor of Standard Chartered Bank.

Processing Fees Loan Processing Fees: 0.25% of the loan amount Documentation Fees: 1% of the loan amount Accessible At Standard Chartered, we believe in delivering our services to customers?doorsteps. Simply call our 24-hour Call Centre and our highly-trained representatives will visit you at your convenience.

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The world's local bank

Home loan The decision to buy or renovate a home is one of the most important investment decision you will ever make. HSBC's Home Loan facility will assist you in purchasing new apartment or renovate your home.

Benefits

No personal gurantee or cash security. Competitive interest rates. Interest is calculated on a monthly reducing balance as opposed to an annual reducing balance, giving you a lower monthly instalment amount with HSBC. A maximum loan amount of 70% of the total value of the apartment or BDT2,000,000 for renovation Loan size between a minimum of BDT 750,000 and maximum of BDT 7,500,000. Financing for the registration cost. Repayments by monthly instalments of up to 15 years or prior to borrower's age reaching 60 years or retirement date, whichever is earlier. Partial prepayment and prepayment allowed.

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Who can apply?

You should be employed by a well-established company for 2 years. If less than 2 years in current job, previous employment record will be considered. Minimum monthly income of at least BDT 40,000. Spouses may club their incomes together and apply as joint applicants. Self employed individuals can also apply subject to adequate proof of income.

Requirements

Letter from your employer. Documents stated in the Application Form. We do not require any personal guarantee or cash security to support the loan. A registered mortgage in favour of HSBC and original title deed. Property insurance is required covering fire, earthquake, flood, and cyclone.

Comparison:
Name of the bank Dutch-Bangla Bank Ltd. Mutual Trust Bank Ltd. Loan Amount BDT 200,000 Salaried to BDT 5000, executives & 000 Up to BDT 5000, 000 businessman Salary paid Eligibility Interes t Rate Up to 15% Up to Deed of the land or property Purchased lands Up to 15 years Up to 15 Equal monthly installment Equal monthly 15 6-12 months Collateral Tenure Installment Grace period Nil

executive/serv 15%

ice holder/busines Shahjalal Islami Bank Ltd. Up to BDT 7000,000 sman Serving defense officer, wage earners, reputed service holders (up to Standard Chartered Bank Up to BDT 7500, 000 65years) Should have at least three years of service/ professional/ business records of accomplishme nt (30-60 years). HSBC BDT 750,000BDT 7,500,000 Self employed Up to individuals, employed by a wellestablished company for 2 years, Minimum monthly income of at 15% Up to 15% 14%15%

registered mortgage Building with land & charged documents

years

installment

Up to 20 years

Equal monthly installment

Nil

Registered mortgage of the property

Up to 15 years

Equal monthly installment

Nil

A registered mortgage in favor of HSBC and original title deed.

Up to 15 years

Equal monthly installment

Nil

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least BDT 40,000.

Conclusion: A home equity loan allows using the equity of your home as a line of credit. Changes in banking laws now allow commercial banks to make home mortgage loans on a more liberal basis than ever before.from the table we can see that there is not a huge difference of the home loan providing requirements.More or less every commercial bank offers home loan up to 75 lacs. The eligibility, interest rate is also near around same. Home installment loan services have been popularizing among the customers of medium-low income levels in the society. It is demonstrated that the foreign sample bank is providing prompt services as compare to local sample bank as regards personal installment loan facilities, terms and conditions, fees, target market and customized products. However, foreign banks are charging more charges than the local bank. It is observed that foreign commercial banks are more dynamic, technological oriented and aggressive customer service than the local commercial bank. However, there are some differences in terms and conditions of the home loan product of the nationalized, private and foreign commercial banks we have analyzed that almost all the banks are very competitive in their business and their priority is to give the best to their customers.

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