Bangladesh Bank has revised its home loan policy to widen access to housing finance amid sustained rises in construction material costs, growing urban housing demand, and the objective of making home ownership more attainable for middle- and upper-middle-income households. The updated framework allows eligible borrowers to secure significantly larger loans than before, a move policymakers and industry participants believe will inject fresh momentum into the country’s housing and construction sectors.
The new directive was issued on Tuesday, 6 January, by Bangladesh Bank’s Banking Regulation and Policy Department-1. Under the revised rules, the maximum amount a customer may borrow for a home loan is now linked directly to the lending bank’s performance in managing non-performing loans (NPLs) within its housing finance portfolio. In essence, banks with stronger credit discipline and lower default rates are rewarded with greater flexibility to extend larger loans to individual borrowers.
According to the circular, banks whose home loan NPL ratio stands at 5 per cent or below may now offer a single customer a home loan of up to Tk40 million. Where the NPL ratio exceeds 5 per cent but remains within 10 per cent, the maximum loan ceiling is set at Tk30 million. For banks with NPL ratios above 10 per cent, the cap is Tk20 million per borrower. By tying loan limits to asset quality, the central bank aims to strengthen risk management while encouraging banks to improve recovery and monitoring practices.
The policy also reiterates prudent loan-to-value standards. Banks may finance up to 70 per cent of the total purchase price of a house or flat, with borrowers required to contribute the remaining minimum 30 per cent from their own sources. Before approving any loan, banks must rigorously assess the applicant’s income level, employment or business stability, and capacity to service monthly instalments on a sustained basis. These safeguards are intended to protect borrowers from excessive debt burdens while preserving financial stability within the banking system.
Economists and sector analysts suggest the revised policy could have a broad multiplier effect. Increased access to housing finance is expected to stimulate demand not only in real estate but also across allied industries such as cement, steel rods, bricks, fittings, and other construction materials. At the same time, the NPL-linked structure is likely to foster healthy competition among banks, motivating them to improve loan quality in order to retain or expand their lending capacity.
Bangladesh Bank has confirmed that all previous circulars on home loan limits have been withdrawn and replaced by this new directive, which takes effect immediately. The central bank expressed confidence that the updated framework will enhance transparency, discipline, and resilience in the housing finance market while supporting orderly growth in the broader economy.
Summary of the New Home Loan Policy
| Bank NPL Ratio (Home Loans) | Maximum Loan per Borrower |
|---|---|
| 5% or below | Tk40 million |
| Above 5% to 10% | Tk30 million |
| Above 10% | Tk20 million |
Through this recalibrated approach, Bangladesh Bank aims to balance expanded credit access with stronger risk controls, reinforcing confidence in the home loan system for both lenders and borrowers alike.