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M. Shamsul Arefin, Managing Director, NCC Bank PLC.

Bangladesh's home finance sector is showing impressive resilience despite global economic headwinds, with demand for housing and construction loans surging over the past three years. Rapid urbanisation, strong remittance inflows, and policy support are fuelling growth while digital innovation and green financing are reshaping how banks serve customers. To explore these trends and challenges, The Daily Star spoke with M. Shamsul Arefin, Managing Director of NCC Bank PLC.

Demand Drivers and Evolving Trends

Accelerating urbanization has made the dream of owning an apartment or constructing a home a tangible goal for many. Non-Resident Bangladeshis (NRBs) are an increasingly active segment, securing home loans as they plan their eventual return. The government's sustained focus on urban development and infrastructure projects has amplified demand for both residential and commercial properties. Concurrently, the sector is embracing technology and sustainable development practices, creating fertile ground for innovation.

Affordability Anchored by Rates and Regulation

Affordability is anchored by the interplay of interest rates and regulatory support. While high rates can dampen demand, the banking sector has maintained competitive interest rates for home loans, aligning them with deposit rates to keep financing within reach. At NCC Bank, a core strategy is offering lower interest rates to ensure customer affordability. Supportive regulatory bodies have played a crucial role by continually refining guidelines to make home loans more accessible and customer-friendly, thereby encouraging broader homeownership.

Green Housing and Inclusive Finance

Beyond traditional offerings, specialized products like "Home Loan," "Home Improvement Loan," and "Abashan Loan" are gaining traction. NCC Bank PLC is actively promoting green housing projects to emphasize environmental protection. Under its "Abashan Loan" scheme, the bank offers special incentives, including reduced processing fees for customers who install solar panels. "We are committed to promoting environmentally responsible housing while keeping costs manageable," a bank representative stated. This initiative aligns with an industry-wide push towards eco-friendly financing that fosters economic growth and social benefits like enhanced savings. NCC Bank is also planning further competitive offerings for sustainable housing projects.

Addressing Market Challenges

Both developers and buyers face hurdles. Buyers often encounter scrutiny over property quality and market value, sometimes revealing discrepancies between asset value and desired loan amounts. Repayment capacity, especially amidst fluctuating interest rates, and a lack of documented income for informal sector workers can also hinder access to finance. Developers grapple with volatile construction material costs and high inflation, which can escalate project expenses beyond initial loan estimates.

NCC Bank mitigates these issues through comprehensive assessments by its team of home loan experts. They conduct meticulous property document scrutiny, guide customers through the process, and offer competitive interest rates to help manage the impact of inflation and ensure sustainable repayments.

The Rise of Semi-Urban Living

A significant demographic shift towards semi-urban areas is reshaping housing demand. Congestion and high costs in major cities are driving a growing population, primarily from the mid-income segment, towards semi-urban locales that offer more space, lower density, and affordable land. Crucially, improvements in infrastructure—including roads, utilities, and public transport—enhance their appeal. Developers are capitalizing on lower land prices and strong growth potential in these areas.

Digital Transformation and Accessibility

To enhance efficiency, digital solutions are becoming pivotal. NCC Bank PLC has partnered with FinCoach Bangladesh Limited, an online financial marketplace, to streamline its financing process. This collaboration allows customers to apply for home loans conveniently and quickly through a digital platform, advancing paperless processing and customer accessibility.

Strategic Outlook for 2025-2026

Looking ahead to 2025-2026, NCC Bank PLC maintains an optimistic outlook on the housing market. The bank is strategically positioning itself to support this growth by broadening its home loan offerings to cater to diverse customer segments. Key initiatives include forging agreements with top-tier developers to expand apartment financing, enhancing its digital marketing presence, and leveraging all sourcing channels to reach a wider customer base.