Khurshed Alam is an Executive Vice President at LankaBangla Finance Limited and looks after the Personal Financial Services Division. Khurshed started his career in 1992 as a Probationary Officer in Rupali General Insurance Company Limited. He obtained his Honors and Masters in Management under the University of Dhaka. He also got his Post Graduate Diploma in Personnel Management (DPM) from Bangladesh Institute of Management.
Home loans are important instruments which help people acquire living spaces. With so many active operators in the market, how are you setting your product apart from that of your competitor’s?
When we design the features of a home loan product for the customer, we always try to deliver greater value. The customers’ need is our top priority. We try to accommodate the comparable value-added services for our clients proactively. In this very competitive market, we ensure the following financial solutions to our customers according to their desires:
i. A higher loan amount to value than our peers
ii. Flexible loan tenor
iii. Disbursement of the loans in various phases as per customers’ needs
iv. Early/partial settlement options,
v. Tailored loans for construction, purchase or renovation of residential or commercial spaces
vi. Free ancillary services during loan tenor.
We believe in selling solutions for customers and not just a product or service.
The growth of the real estate sector coincides with the growth of the economy and the living standards of the people. How do you define your position in the market in this regard?
There is a definitive relationship between the growth of the economy and the living standard of the people. When the economy grows upward, the population’s buying attitude improves accordingly. Bangladesh, with a population of 162 million, remains an emerging nation with rising per capita GDP. We believe, Bangladesh has booming prospects for real estates. As of 2014, the urban population stood at 34.3% of the total population increasing by approximately 100 basis points each year during last 5 years. During that time frame, the population growth rate of the country was around 1.2%, whereas, urban population growth rate was 3.5%. This figure is higher than that of India (2.4%), Myanmar (2.5%), China (2.8%), Vietnam (3.1%) and Pakistan (3.3%). This kind of rapid urbanization would work as a catalyst in making Bangladesh a prospect for large-scale real estate development. On another front, the rising per capita GDP confers a greater comfort and accordingly people pursue a better living space. So effectively, we are positioning our product in such a way that would help people fulfill their dreams. We are reaching major townships with even more attractive products at a competitive rate. We believe in the near future owning a home won’t remain a luxury only accessible to the rich.
Minimizing the interest cap will increase your business. What has impeded you in this case?
We proactively adjust our interest rates whenever the money market situation allows it. In this context, I would infer that being an NBFI, our rate is quite competitive. Over the last few years, our cost of fund has decreased significantly and we are offering comparatively lower rates for our home loan products. As I mentioned earlier, we want to create greater value for our customers. In this pursuit, we have created a differential value proposition with our value added services; tailoring our loan products as per customers’ need. That is why our customers have continuously chosen LankaBangla Home Loan.
A home or house not only provides physical shelter but also has a significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self-confidence and dignity.
As a part of the retail banking process, how are you maintaining your standard of customer service?
At LankaBangla, we are always customer centric. We don’t stop our service after disbursing a loan; during the loan tenure, we provide free ancillary services to our existing customers. We open our doors with a welcoming attitude and hence our vesting customers experience a very friendly environment. Being a financier with the largest product umbrella, we can provide various other financial products. Customers with whom we have long-standing relationships are provided with special discounts in other services.
Are you developing any apps for home loan customers?
We have already launched a Mobile App known as FinSmart for our existing customers where all of our products details are described including home loans. Anyone can download this app on their mobile and obtain detailed information about our products and services along with their loan statements/balance and etc. Additionally, we have 24/7 call centers where a customer can call anytime for further support.
How are you judging the home loan markets?
A home or house not only provides physical shelter but also has a significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self-confidence and dignity. Home Loan finance, therefore, plays a role in boosting equitable economic growth and reducing poverty through helping households build assets, improving living conditions, empowering the middle and lower-income population, thus strengthening communities. A boom in the real-estate sector will have spin-offs for great many allied industries such as steel, cement, brick, tiles, fittings and so on. According to REHAB (Real Estate and Housing Association of Bangladesh), the real-estate and allied sectors contribution to the economy is around Tk 250 billion. REHAB have conducted a study in 2012 that found an estimated demand for flats in three years to be around 75,000 to 100,000. In 2017, the demand will grow to around 90,000 to 125,000, as an overwhelming majority of the population still don’t own their property of residence. However, by the year 2022, the hunt for homes will be easing; demand will go down to approximately 70,000 to 95,000. Given the parameters of this trend, we believe that the home loan markets in Bangladesh will spread significantly, not only in the capital city but also in the rural areas with a lower interest rate regime.