SBI keen to tap home loan market in Bangladesh

Kolkata, Nov. 14: State Bank of India plans to tap the home loan market in Bangladesh in a big way.

The bank – which already has four branches in the country – plans to add four more by end December 2012 to tap the retail demand, said Mr Pratip Chaudhuri, Chairman, State Bank of India.

The bank has two branches in Dhaka, one in Chittagong and one in Sylhet. It also has licence for two more branches in Rajshahi and Khulna. The Bangladesh Government, Mr Chaudhuri said, has assured the bank of granting further licences for a branch at Narayanganj and a second branch at Chittagong once these two branches are operational.

“We want to do home loans in Bangladesh in a big way. The Bangladesh home loan market at present can be compared to the Indian home loan market about 15 years back,” Mr Chaudhuri said.

Citing example of the market in India, Mr Chaudhuri said, “The increase in the number of home loan providers and with a lot of new homes coming up has given a fillip to the Indian economy and boost to the industry. Similarly, we think Bangladesh has a huge untapped potential.”

Lack of availability of long-term finance was the key constraint for developing the home loan market, Mr Chaudhuri pointed out. “For doing wholesale business, you will not need long-term money but for retail and that too particularly home loans you need long term funds.”

State Bank has a total exposure of $300 million (approximately Rs 1,500 crore at the present exchange rate) in Bangladesh at present, Mr Chaudhuri said. A senior State Bank official heading a branch in Bangladesh said that the bank already has a retail exposure in the country. “There is a good scope for retail business and we are putting in place the infrastructure required for gearing it up further.”

The average ticket size of home loan in Bangladesh was about Rs 40 lakh. “Our presence is still not too large in the country so we have not been able to tap the mass market. But with these new branches operational we are hopeful of catering to the mass demand and our ticket size might come down further,” he said.

Not too many Indian banks have a branch network in Bangladesh at present though some banks have representative offices in the country. HSBC and Standard Chartered are some of the foreign banks doing retail business in Bangladesh, the official said.