1

Presentation On Marketing of HBFC Products & Project Financing By: Muhammad Iqbal Shad Chief Manager (Marketing) Marketing Division, Lahore
2

HBFC New Vision & Mission

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

Mission
HBFC to be socially responsible & commercially
sustainable housing finance institution
3

Products

For Construction or Purchase

Ghar Aasan Scheme

For Repair & Renovation

Shandar Ghar Scheme

Strengths of HBFC
Corporate
HBFC being pioneer Housing Finance Institution of the Country Trust of people on HBFC being a public sector Organization.

HBFC having old relationships with the clients.

Strengths of HBFC (Cont..

Brands
A Shariah Complaint Scheme Clubbing of Family Income permissible No hidden charges Constant Life Insurance Coverage to the extent of original amount disburseda unique policy. Free construction period 9/12 months. No repayment of principal during moratorium period. No negative profession. No negative area. Every legalized scheme having amenities of life. Fixed rates repayment schedule No pre-payment charges Minimum processing fee

Steps Taken for Improvement

Induction of new professional Managers & Qualified staff. Establishment of franchise offices. Up-gradation of HBFC offices. Making of HBFC website more informative, customer friendly & interactive

LIST OF Focal Points

Sr. No.
1 2 3 4 5 6 7

Name of Officer
Mr. Illyas Hassan Akhtar, Assistant Manager (F&A) Mr. Ather Mehmood Iqbal Manager (Law) Syed Sabir Ali Assistant Manager Mohammad Ghayas Zonal Manager Mr. Zulfiqar Ali Hakro Assistant Manager (OPS) Rana Muhammad Saleem District Manager Quetta Mr. Sami Dad Khan Manager (Audit)

Zone
Lahore Multan Faisalabad Gilgit

Sukker
Quetta Islamabad
9

LIST OF Focal Points (Cont..

Sr. No.
8
9 10 11

Name of Officer
Mr. Sheraz Farooq Assistant Manager
Mr. Mehtab Alam Bukhari Assistant Manager (Investment) Mr. Akhtar Hussain Pathan Mr. Rustam Khan Manager

Zone
Karachi HP Zone Hyderabad

Abbotabad

10

Marketing
Competition Market segmentation Advertising Campaigns & Promotions Positioning

11

Competition
1952 - 2000 2000 2006
Challenge:very scenario.

Virtual Monopoly
25 Competitors
(More are entering) From monopolistic situation to a competitive market

Strategy:friendly,

Think Out of Box, Be Customer and time & cost efficient.

12

Main Competitors
Name of Bank / NBFIs ABN AMRO ALFALAH * CITI BANK FAYSAL BANK * HBL NBP MEEZAN BANK * UNION BANK Markup Floating Fixed 9.5% 15% 9.5% 9% 9.5% 9.5% 9% 9.5% 9% 10% 14% 14% 15% 15% 14% 14% Revisable after 5 years Rate Revisable after 10 years Quarterly floating 9% For Salaried 10% For Business SPECIAL FEATURE

PICIC

9.5%

14%
13

* Represent Islamic Mode of Finance

Market Segmentation
LOAN/INVESTMEN T CLASSIFICATION AREAS INVESTMENT Slabs
Rs.0.1 to 0.2 million Model villages & Towns

MONTHLY INCOME RANGE

AGE

Micro

Rs.3000 to 6000

18 to 55 year

Small

Rs.0.2 to 1 million

Tehsils & Towns

Rs. 6,000/- to 30,000/-

18 to 55 year

Lower Medium Upper Medium High

Rs.1 to 2.5

Urban Areas

Rs. 30,000/- to 75,000

18 to 55 Year

Rs2.5 -5 million

Big cities / DHQ (FSD, MTN, Pindi etc.) 5 big cities posh Areas (KHI, LHR, ISL, PINDI,

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

18 to 55 year

Rs. 5 7.5 million

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

18 to 55 year 14

EMPHASIS

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

15

Advertising
Billboards Hoardings Print & Electronic Media Website Seminars & conferences Exhibitions Brochures
16

Campaigns & Promotions

Opening of Representatives offices in small Districts and Tehsils to facilitate the clients & promote sales. Participation in the leading exhibitions on housing & construction industry Low Cost Housing Scheme in Gwadar City LOW Cost Housing Scheme of Taiser Town, Malir Karachi. Low Cost Housing Scheme of Khuda-Ki- Basti in collaboration with Saiban Lahore. Making arrangements for sponsoring low-cost Housing schemes in other cities HBFC being a pioneer Housing Finance Institution in SMH sector is sponsoring Low Cost Hosing Schemes in the country;
17

Customer Retention
HBFC provides Investment facility for repair & renovations to all its regular existing partners HBFC provides additional Investment Facility to all its existing partners for additional construction on the Income & Guarantee of their blood relations HBFC existing clients are also eligible for 2nd Investment on closure of 1st loan availed by them.

18

Positioning
HBFC
SMH Business

Competitors
25 Banks- High net worth clients Posh Localities Focus on Purchase Name Lending

All over Country

Construction ( increasing Housing Stocks) Prudent Credit Assessment

19

Project / Bulk Financing for Housing Sector

20

Eligibility criteria
Builders/ Developers should possess valid builder / developer license from Building Control Authority, where applicable. Builders/Developers undertaking development of sites or construction of housing project must have at least five years experience and good track record in the construction of housing projects / development of sites. Have timely completed development of sites / construction of minimum three housing projects of reasonable size. CIB report in respect of sponsors of the project i.e. firm as well as its Directors or Partners is positive. 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 builders/sponsors. No construction shall commence without an approved building plan or approved layout plan by a competent authority, where applicable. 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 shall be followed as prescribed by HBFC as per rules. Audited Balance Sheet of the company if it is a Private or Public Limited Company. 21

How to apply
The builder will apply to the Managing Director, HBFC Head Office, Karachi on the prescribed application form of HBFC (Copy enclosed at annex A, through authorized person of the Company/Builder, with non refundable processing fee as below: 1. If project consisting upto 50 flats/houses only Rs.10,000/2. If project consisting from 51 flats/houses to 100 flats/houses only Rs. 25,000/3. If project consisting above 100 flats/houses Rs.50,000/-

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

22

Documents Relating to Company

a) Registration certificate of the firm. b) Memorandum and Articles of Association/Partnership Deed. c) Detail of Administrative and technical set up (Names, Qualification & Experience). d) Valid PEC (Pakistan Engineering Council) License and relevant experience of the Architects and Engineers engaged for the supervision/ construction of the Project. e) Builders License. f) Membership certificate of ABAD, where applicable g) Any other documents required by HBFC.

23

Documents Relating to Financial Standing

a) Last audited balance sheet. a) Income Tax Assessment Order of the firm for the last two years or acknowledgement/copy of the return submitted by the Builder/company for the last two years; a) Bankers confidential report on financial credibility of the firm as well as its Directors / Partners.

24

Title Documents
a) b) c) d) e) All documents concerning ownership of land. Concept plan (at the time of submission of application The Builder/Company will submit the approved Building Plan before sanction; Permission to Assign (if applicable) Non encumbrance certificate.

f)
g)

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

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

25

Valuation
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.

Legal & Financial Scrutiny

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 will clear the case within 7 working days) 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 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 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 resolution passed by the Board of Directors in its 4/2003 meeting held on 2807-2003.

26

Preparation of Investment Proposal

After receiving recommendation of the Project Committee, the Operation division will prepare a proposal for investment within 7 working days.

Audit
The case will be forwarded to audit Division of HOK for audit. The audit department will clear the case within 7 working days.

Approval of Investment
Approval of Investment shall be made by the Project Committee in 15 working days.

27

Issuance of Term Sheet

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 builder within 15 working days time.

Post Approval Formalities

The builders will submit contractors All risk Insurance Policy from an insurance company listed on stock exchange. ii. Personal Guarantees of each Director/Partner. iii. Legal vetting of draft of Murabaha and other Agreements. iv. Completion of formalities, Execution of Agreements regarding equitable or registered mortgage, as the case may be. i.

28

Disbursement
Banking arrangements
a) 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 banking arrangement.
b) All transactions including disbursement and collection of money on account of booking of flats/housing units and subsequent installments from the allottees and withdrawals for the construction of the project under pre agreed terms will be made through collection account. c) Payment from the allottees on account of booking and subsequent installments shall be made through Account Payee cheques only which will be deposited in the same bank account.

29

Debt / Equity Ratio

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

Rate of Profit
The Assets and Liability Committee shall determine the rate of profit for bulk/bridge finance in general or on case to case basis.

Syndication Committee
The Project syndicate Committee will comprise of Managing Director one member from the Assets and Liability Committee and one member from the

Project Committee;

30

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

31

Thank you
32