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PresentationPresentation

OnOn

Marketing of HBFC Products & Marketing of HBFC Products &

Project FinancingProject Financing

By:By:

Muhammad Iqbal ShadMuhammad Iqbal Shad

Chief Manager (Marketing)Chief Manager (Marketing)

Marketing Division, LahoreMarketing Division, Lahore

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HBFC New Vision & MissionHBFC New Vision & Mission

VisionVision “ “HBFC to be the prime Housing Finance Institution of HBFC to be the prime Housing Finance Institution of

the country, providing affordable housing solutions to the country, providing affordable housing solutions to low & middle income groups of population by low & middle income groups of population by encouraging new construction in small and Medium encouraging new construction in small and Medium Housing (SMH) sector”Housing (SMH) sector”

MissionMission “ “HBFC to be socially responsible & commercially HBFC to be socially responsible & commercially

sustainable housing finance institutionsustainable housing finance institution””

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ProductsProducts

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For Construction or Purchase

Ghar Aasan Scheme

For Repair & Renovation

Shandar Ghar Scheme

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Strengths of HBFC Strengths of HBFC

CorporateCorporate

HBFC being pioneer Housing Finance Institution of the CountryHBFC being pioneer Housing Finance Institution of the Country

Trust of people on HBFC being a public sector Organization.Trust of people on HBFC being a public sector Organization.

HBFC having old relationships with the clients.HBFC having old relationships with the clients.

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Strengths of HBFC (Cont…..Strengths of HBFC (Cont…..

BrandsBrands A Shariah Complaint SchemeA Shariah Complaint Scheme Clubbing of Family Income permissibleClubbing of Family Income permissible No hidden chargesNo hidden charges Constant Life Insurance Coverage to the extent of original amount disbursed- Constant Life Insurance Coverage to the extent of original amount disbursed-

a unique policy.a unique policy. Free construction period 9/12 months.Free construction period 9/12 months. No repayment of principal during moratorium period.No repayment of principal during moratorium period. No negative profession.No negative profession. No negative area. Every legalized scheme having amenities of life.No negative area. Every legalized scheme having amenities of life. Fixed rates repayment scheduleFixed rates repayment schedule No pre-payment chargesNo pre-payment charges Minimum processing feeMinimum processing fee

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Steps Taken for ImprovementSteps Taken for Improvement

Induction of new professional Managers & Qualified staff.Induction of new professional Managers & Qualified staff.

Establishment of franchise offices.Establishment of franchise offices.

Up-gradation of HBFC offices.Up-gradation of HBFC offices.

Making of HBFC website more informative, customer friendly & Making of HBFC website more informative, customer friendly & interactiveinteractive

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LIST OF Focal PointsLIST OF Focal PointsSr. No.Sr. No. Name of OfficerName of Officer ZoneZone

11 Mr. Illyas Hassan Akhtar,Mr. Illyas Hassan Akhtar,

Assistant Manager (F&A)Assistant Manager (F&A) LahoreLahore

22 Mr. Ather Mehmood IqbalMr. Ather Mehmood Iqbal

Manager (Law)Manager (Law) MultanMultan

33 Syed Sabir AliSyed Sabir Ali

Assistant ManagerAssistant Manager FaisalabadFaisalabad

44 Mohammad GhayasMohammad Ghayas

Zonal ManagerZonal Manager GilgitGilgit

55 Mr. Zulfiqar Ali HakroMr. Zulfiqar Ali Hakro

Assistant Manager (OPS)Assistant Manager (OPS) SukkerSukker

66 Rana Muhammad SaleemRana Muhammad Saleem

District Manager QuettaDistrict Manager Quetta QuettaQuetta

77 Mr. Sami Dad KhanMr. Sami Dad Khan

Manager (Audit)Manager (Audit) IslamabadIslamabad

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LIST OF Focal Points (Cont…..LIST OF Focal Points (Cont…..Sr. No.Sr. No. Name of OfficerName of Officer ZoneZone

88 Mr. Sheraz FarooqMr. Sheraz Farooq

Assistant ManagerAssistant Manager KarachiKarachi

99 Mr. Mehtab Alam BukhariMr. Mehtab Alam Bukhari

Assistant Manager (Investment)Assistant Manager (Investment) HP ZoneHP Zone

1010 Mr. Akhtar Hussain PathanMr. Akhtar Hussain Pathan HyderabadHyderabad

1111 Mr. Rustam KhanMr. Rustam Khan

ManagerManager AbbotabadAbbotabad

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MarketingMarketing

CompetitionCompetition Market segmentationMarket segmentation AdvertisingAdvertising Campaigns & PromotionsCampaigns & Promotions PositioningPositioning

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CompetitionCompetition

1952 - 20001952 - 2000 Virtual MonopolyVirtual Monopoly

2000 – 20062000 – 2006 25 Competitors25 Competitors

(More are (More are entering)entering)

Challenge:-Challenge:- From monopolistic situation to a very From monopolistic situation to a very competitive market competitive market

scenario.scenario.

Strategy:-Strategy:- Think “Out of Box”, Be Think “Out of Box”, Be Customer friendly, Customer friendly, and time & cost and time & cost efficient.efficient.

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Main CompetitorsMain Competitors

Name of Bank / NBFI’sName of Bank / NBFI’s MarkupMarkup

Floating FixedFloating Fixed

SPECIAL FEATURESPECIAL FEATURE

ABN AMROABN AMRO 9.5% 15%9.5% 15% ALFALAH *ALFALAH * 9.5% 14%9.5% 14%

CITI BANKCITI BANK 9% 14%9% 14%

FAYSAL BANK *FAYSAL BANK * 9.5% 15%9.5% 15%

HBLHBL 9.5% 15%9.5% 15% Revisable after 5 yearsRevisable after 5 years

NBPNBP 9% 14%9% 14% Rate Revisable after 10 Rate Revisable after 10 yearsyears

MEEZAN BANK *MEEZAN BANK * 9.5% -9.5% - Quarterly floatingQuarterly floating

UNION BANKUNION BANK 9% 14%9% 14%

10%10%

9% For Salaried9% For Salaried

10% For Business10% For Business

PICICPICIC 9.5% 14%9.5% 14%

* Represent Islamic Mode of Finance

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Market SegmentationMarket SegmentationLOAN/LOAN/

INVESTMENT INVESTMENT CLASSIFICATIONCLASSIFICATION

INVESTMENTINVESTMENT

SlabsSlabs

AREASAREAS MONTHLY MONTHLY INCOME INCOME RANGERANGE

AGEAGE

MicroMicro Rs.0.1 to 0.2 Rs.0.1 to 0.2 millionmillion

Model villages & Model villages & TownsTowns

Rs.3000 to 6000Rs.3000 to 6000 18 to 55 year18 to 55 year

Small Small Rs.0.2 to 1 millionRs.0.2 to 1 million Tehsils & TownsTehsils & Towns Rs. 6,000/- to Rs. 6,000/- to 30,000/-30,000/-

18 to 55 year18 to 55 year

Lower Lower MediumMedium

Rs.1 to 2.5Rs.1 to 2.5 Urban AreasUrban Areas Rs. 30,000/- to Rs. 30,000/- to 75,00075,000

18 to 55 Year18 to 55 Year

Upper Upper Medium Medium

Rs2.5 -5 millionRs2.5 -5 million Big cities / DHQ Big cities / DHQ (FSD, MTN, Pindi (FSD, MTN, Pindi

etc.)etc.)

Rs. 75,000/- to Rs. 75,000/- to 150,000/-150,000/-

18 to 55 year18 to 55 year

HighHigh Rs. 5 – 7.5 millionRs. 5 – 7.5 million 5 big cities posh 5 big cities posh Areas (KHI, LHR, Areas (KHI, LHR,

ISL, PINDI, ISL, PINDI, PSWR,)PSWR,)

Rs. 150,000/- to Rs. 150,000/- to 225,000/-225,000/-

18 to 55 year18 to 55 year

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EMPHASISEMPHASIS

SMH SMH FINANCINGFINANCING

(For Micro Housing Finance a separate company in the name of(For Micro Housing Finance a separate company in the name ofSocial housing company is being formed)Social housing company is being formed)

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AdvertisingAdvertising

– Billboards Billboards – HoardingsHoardings– Print & Electronic MediaPrint & Electronic Media– WebsiteWebsite– Seminars & conferencesSeminars & conferences– ExhibitionsExhibitions– BrochuresBrochures

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Campaigns & PromotionsCampaigns & Promotions

– Opening of Representatives offices in small Districts and Opening of Representatives offices in small Districts and Tehsils to facilitate the clients & promote sales.Tehsils to facilitate the clients & promote sales.

– Participation in the leading exhibitions on housing & Participation in the leading exhibitions on housing & construction industryconstruction industry

– Low Cost Housing Scheme in Gwadar CityLow Cost Housing Scheme in Gwadar City– LOW Cost Housing Scheme of Taiser Town, Malir Karachi.LOW Cost Housing Scheme of Taiser Town, Malir Karachi.– Low Cost Housing Scheme of Khuda-Ki- Basti in Low Cost Housing Scheme of Khuda-Ki- Basti in

collaboration with Saiban Lahore.collaboration with Saiban Lahore.– Making arrangements for sponsoring low-cost Housing Making arrangements for sponsoring low-cost Housing

schemes in other citiesschemes in other cities– HBFC being a pioneer Housing Finance Institution in SMH HBFC being a pioneer Housing Finance Institution in SMH

sector is sponsoring Low Cost Hosing Schemes in the country;sector is sponsoring Low Cost Hosing Schemes in the country;

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Customer RetentionCustomer Retention

HBFC provides Investment facility for repair & renovations to HBFC provides Investment facility for repair & renovations to all its regular existing partnersall its regular existing partners

HBFC provides additional Investment Facility to all its existing HBFC provides additional Investment Facility to all its existing partners for additional construction on the Income & Guarantee partners for additional construction on the Income & Guarantee of their blood relationsof their blood relations

HBFC existing clients are also eligible for 2HBFC existing clients are also eligible for 2ndnd Investment on Investment on closure of 1closure of 1stst loan availed by them. loan availed by them.

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PositioningPositioningHBFCHBFC

SMH BusinessSMH Business

All over CountryAll over Country

Construction ( increasing Construction ( increasing Housing Housing

Stocks)Stocks) Prudent Credit AssessmentPrudent Credit Assessment

CompetitorsCompetitors

25 Banks- High net worth 25 Banks- High net worth

clientsclients Posh LocalitiesPosh Localities

Focus on PurchaseFocus on Purchase

Name LendingName Lending

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Project / Bulk Financing for Housing Project / Bulk Financing for Housing SectorSector

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Eligibility criteriaEligibility criteria

Builders/ Developers should possess valid builder / developer license from Builders/ Developers should possess valid builder / developer license from Building Control Authority, where applicable.Building Control Authority, where applicable.

Builders/Developers undertaking development of sites or construction of Builders/Developers undertaking development of sites or construction of housing project must have at least five years experience and good track record housing project must have at least five years experience and good track record in the construction of housing projects / development of sites.in the construction of housing projects / development of sites.

Have timely completed development of sites / construction of minimum three Have timely completed development of sites / construction of minimum three housing projects of reasonable size.housing projects of reasonable size.

CIB report in respect of sponsors of the project i.e. firm as well as its CIB report in respect of sponsors of the project i.e. firm as well as its Directors or Partners is positive.Directors or Partners is positive.

Clear and marketable title to the land free from all encumbrances, charges and Clear and marketable title to the land free from all encumbrances, charges and liens on which the project will be built in case it is offered as an equity of the liens on which the project will be built in case it is offered as an equity of the builders/sponsors.builders/sponsors.

No construction shall commence without an approved building plan or No construction shall commence without an approved building plan or approved layout plan by a competent authority, where applicable.approved layout plan by a competent authority, where applicable.

Where HBFC is involved in the purchase of and development of sites with the Where HBFC is involved in the purchase of and development of sites with the developers the land shall be free from all encumbrances and debt equity ratio developers the land shall be free from all encumbrances and debt equity ratio shall be followed as prescribed by HBFC as per rules.shall be followed as prescribed by HBFC as per rules.

Audited Balance Sheet of the company if it is a Private or PublicAudited Balance Sheet of the company if it is a Private or Public Limited Company. Limited Company.

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How to applyHow to apply

The builder will apply to the Managing Director, HBFC Head The builder will apply to the Managing Director, HBFC Head Office, Karachi on the prescribed application form of HBFC Office, Karachi on the prescribed application form of HBFC (Copy enclosed at annex “A”, through authorized person of the (Copy enclosed at annex “A”, through authorized person of the Company/Builder, with non refundable processing fee as below:Company/Builder, with non refundable processing fee as below:

1.1. If project consisting upto 50 flats/houses only Rs.10,000/-If project consisting upto 50 flats/houses only Rs.10,000/-2.2. If project consisting from 51 flats/houses to 100 flats/houses If project consisting from 51 flats/houses to 100 flats/houses

only Rs. 25,000/-only Rs. 25,000/-3.3. If project consisting above 100 flats/houses Rs.50,000/-If project consisting above 100 flats/houses Rs.50,000/-

The application shall be supported with the photocopies of The application shall be supported with the photocopies of the following documents.the following documents.

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Documents Relating to CompanyDocuments Relating to Company

a)a) Registration certificate of the firm.Registration certificate of the firm.b)b) Memorandum and Articles of Association/Partnership Deed.Memorandum and Articles of Association/Partnership Deed.c)c) Detail of Administrative and technical set up (Names, Detail of Administrative and technical set up (Names,

Qualification & Experience).Qualification & Experience).d)d) Valid PEC (Pakistan Engineering Council) License and relevant Valid PEC (Pakistan Engineering Council) License and relevant

experience of the Architects and Engineers engaged for the experience of the Architects and Engineers engaged for the supervision/ construction of the Project.supervision/ construction of the Project.

e)e) Builder’s License.Builder’s License.f)f) Membership certificate of ABAD, where applicableMembership certificate of ABAD, where applicableg)g) Any other documents required by HBFC.Any other documents required by HBFC.

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Documents Relating to Financial StandingDocuments Relating to Financial Standing

a)a) Last audited balance sheet.Last audited balance sheet.

a)a) Income Tax Assessment Order of the firm for the last two years Income Tax Assessment Order of the firm for the last two years or acknowledgement/copy of the return submitted by the or acknowledgement/copy of the return submitted by the Builder/company for the last two years;Builder/company for the last two years;

a)a) Banker’s confidential report on financial credibility of the firm Banker’s confidential report on financial credibility of the firm as well as its Directors / Partners.as well as its Directors / Partners.

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Title DocumentsTitle Documents

a)a) All documents concerning ownership of land.All documents concerning ownership of land.

b)b) Concept plan (at the time of submission of applicationConcept plan (at the time of submission of application

c)c) The Builder/Company will submit the approved Building Plan before The Builder/Company will submit the approved Building Plan before sanction;sanction;

d)d) Permission to Assign (if applicable)Permission to Assign (if applicable)

e)e) Non encumbrance certificate.Non encumbrance certificate.

f)f) NOC for construction/sale of housing units from the concerned Authority.NOC for construction/sale of housing units from the concerned Authority.

g)g) Any other document (s) relating to title of the Project.Any other document (s) relating to title of the Project.

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ValuationValuation The operation division will get the Project cost valued by at least two The operation division will get the Project cost valued by at least two

approved Valuers of PBA. The cost will be born by the Builder/Company.approved Valuers of PBA. The cost will be born by the Builder/Company.

Legal & Financial ScrutinyLegal & Financial Scrutiny After completion of the above formalities, the case file of the Project will be After completion of the above formalities, the case file of the Project will be

sent to the Legal branch for scrutiny of title to the project (The Legal Branch sent to the Legal branch for scrutiny of title to the project (The Legal Branch will clear the case within 7 working days)will clear the case within 7 working days)

On receipt of the clearance from the Legal Branch, the file will be sent to the On receipt of the clearance from the Legal Branch, the file will be sent to the Finance Division Head Office, Karachi for financial scrutiny; (The Finance Finance Division Head Office, Karachi for financial scrutiny; (The Finance Division will submit the financial scrutiny report within 7 working days)Division will submit the financial scrutiny report within 7 working days)

Once the title is cleared by the legal advisor / legal branch and initial financial Once the title is cleared by the legal advisor / legal branch and initial financial scrutiny by the finance division is complete, the case will be submitted to the scrutiny by the finance division is complete, the case will be submitted to the project committee for examination in the light of the guidelines given in the project committee for examination in the light of the guidelines given in the resolution passed by the Board of Directors in its 4/2003 meeting held on 28-resolution passed by the Board of Directors in its 4/2003 meeting held on 28-07-2003. 07-2003.

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Preparation of Investment ProposalPreparation of Investment Proposal After receiving recommendation of the Project Committee, the After receiving recommendation of the Project Committee, the

Operation division will prepare a proposal for investment within Operation division will prepare a proposal for investment within 7 working days. 7 working days.

AuditAudit The case will be forwarded to audit Division of HOK for audit. The case will be forwarded to audit Division of HOK for audit.

The audit department will clear the case within 7 working days.The audit department will clear the case within 7 working days.

Approval of InvestmentApproval of Investment Approval of Investment shall be made by the Project Committee in 15 Approval of Investment shall be made by the Project Committee in 15

working days.working days.

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Issuance of Term SheetIssuance of Term Sheet After approval of the project financing, a Term Sheet containing the terms & After approval of the project financing, a Term Sheet containing the terms &

conditions on which bridge/bulk financing is approved will be issued to the conditions on which bridge/bulk financing is approved will be issued to the builder within 15 working days time.builder within 15 working days time.

Post Approval FormalitiesPost Approval Formalitiesi.i. The builders will submit contractor’s All risk Insurance Policy from an The builders will submit contractor’s All risk Insurance Policy from an

insurance company listed on stock exchange.insurance company listed on stock exchange.

ii.ii. Personal Guarantees of each Director/Partner.Personal Guarantees of each Director/Partner.

iii.iii. Legal vetting of draft of Murabaha and other Agreements.Legal vetting of draft of Murabaha and other Agreements.

iv.iv. Completion of formalities, Execution of Agreements regarding equitable or Completion of formalities, Execution of Agreements regarding equitable or registered mortgage, as the case may be. registered mortgage, as the case may be.

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DisbursementDisbursement

Banking arrangementsBanking arrangements

a)a) The account will be opened with the bank to be nominated by HBFC The account will be opened with the bank to be nominated by HBFC which will be operated by HBFC and the builders under the escrow which will be operated by HBFC and the builders under the escrow banking arrangement.banking arrangement.

b)b) All transactions including disbursement and collection of money on All transactions including disbursement and collection of money on account of booking of flats/housing units and subsequent installments account of booking of flats/housing units and subsequent installments from the allottees and withdrawals for the construction of the project from the allottees and withdrawals for the construction of the project under pre agreed terms will be made through collection account.under pre agreed terms will be made through collection account.

c)c) Payment from the allottees on account of booking and subsequent Payment from the allottees on account of booking and subsequent installments shall be made through Account Payee cheques only which installments shall be made through Account Payee cheques only which will be deposited in the same bank account. will be deposited in the same bank account.

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Debt / Equity RatioDebt / Equity Ratio The debt / equity ratio for projects financing has been set as 70:30.The debt / equity ratio for projects financing has been set as 70:30.

Rate of ProfitRate of Profit The Assets and Liability Committee shall determine the rate of profit for The Assets and Liability Committee shall determine the rate of profit for

bulk/bridge finance in general or on case to case basis.bulk/bridge finance in general or on case to case basis.

Syndication CommitteeSyndication Committee The Project syndicate Committee will comprise of Managing Director one The Project syndicate Committee will comprise of Managing Director one

member from the Assets and Liability Committee and one member from the member from the Assets and Liability Committee and one member from the

Project Committee;Project Committee;

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Release of fundRelease of fund

Release of fund from the disbursement bank account shall be in installments Release of fund from the disbursement bank account shall be in installments based on actual construction activity. At each stage of construction, the stage based on actual construction activity. At each stage of construction, the stage of construction of Project shall be assessed by the recommended Project of construction of Project shall be assessed by the recommended Project Monitor from HBFC, before the release of funds from the disbursement bank Monitor from HBFC, before the release of funds from the disbursement bank account.account.

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Thank youThank you