This Presentation is based on House Building Finance Corporation Pakistan

Expansion of HBFC’s Presence through Out-Reach Program (EOP)

• House Building Finance Corporation (HBFC) was established in the year 1952 as a Statutory Federal Body under the HBFC Act 1952 with the object of providing financial assistance for the construction and purchase of houses.
• It is amongst the oldest housing finance institutions in the Asia Pacific region.
• For nearly 50 years it enjoyed the monopoly status in housing finance. Today nearly 25 Private Commercial Banks are also engaged in the housing finance business.
• HBFC has always maintained its business focus on low & middle-income housing needs.
• Now it is in the process of Corporatization which is likely to be completed by the end of the year 2006, which will lead to its eventual privatization.

• Being in the Public Sector under an Act of Parliament meant that there were severe limitations placed on HBFC in designing and executing a dynamic and market-based business plan.
• After its likely “Corporatization” by December 2006, HBFC will be operating under a new charter as a Limited Liability Company under the Companies Ordinance.
• This will lead to an eventual “Privatization” Of HBFC when its ownership will be offered to multilateral agencies, housing finance institutions and the general public.
• These new platforms require a new and aggressive Business Plan.
• With IFC’s technical assistance, CMHC of Canada is currently preparing a new “Business Plan” for HBFC.
• With its Comprehensive Reforms Agenda, a new in- house computerized delivery mechanism and aided by a new “Business Plan”, HBFC is all set to meet housing & housing finance challenges in Pakistan

To be the prime housing finance institution of the country, providing affordable housing solutions to low and middle-income groups of the population by encouraging new constructions in the Small & Medium Housing (SMH) sector.

Population growth and a substantial shortage of adequate housing is a major dilemma faced by Pakistan’s population of 150 million people. Pakistan’s population presently increasing every year by 3.5-4 Million, making Pakistan the 6th most populous country after China, India, the USA, Indonesia, and Brazil.

This practically creates a housing demand for setting up 2 new average-sized cities every year, to combat rising urbanization and improve upon person/room density, in densely populated cities.

Pakistan has an average of 6 persons per housing unit, with an average of 3.5 persons per room. Situation in India is the same whereas the global average is 1.1 persons per room.
• Pakistan today has an average population density of 106 persons/square km while just Karachi’ (population:14mn) density is 135 persons/square km
• A careful review indicates an existing backlog of 7.5 million housing units in the country.
• Units needed due to Population Growth: 0.6-0.7 Mn/year
Units needed due to Depletion of Existing Stock (say at 2%): 0.4Mn/year
Total Annual Demand for New Housing Stock:1.1 Mn housing units.
There is a further challenge to meet the massive backlog as well.

• Expansion of Out-Reach Program is a new approach being implemented by HBFC to geographically expand its presence in the country via cost-effective means.
• HBFC was present in only 55 cities through its costly branch network. Under EOP, 25 Representative offices have already been established. By the end of the year 2007, the EOP program would enable HBFC to be present in 150 cities of Pakistan
• Furthermore under this program, HBFC trains “Service Representatives” who are selected after a thorough screening process AND “franchises” HBFC’s client service business to them in selected Urban&Rural locations.

• They serve the clients in specified locations through stationary “Representative offices”.
• Once this cost-efficient Rep. Office program is functional, HBFC intends to use it to cut operating costs by replacing some of its currently non-profitable branches(at least 25) with Representative offices, staffed by Service Representatives.

• Male/Female, HBFC is an equal opportunity employer
• Applicant should have a minimum qualification of graduation. Preference is however given to those with MBA degrees or with a similar qualification, hailing from the same area
• They are provided both “off-site” and “in-house” training. “Off-site” training is conducted at Pakistan Institute of Bankers (IBP).
• District Managers would make fortnightly visits to Representative Offices to offer further support to Service Representatives in handling the clients.