Malik Riaz’s Bank To Offer Islamic Housing Financing for Bahria Town
Posted by ABDUL RAHMAN
Escorts Investment Bank Limited (EIBL) plans to introduce Islamic housing finance. EIBL is owned by the Pakistani business tycoon Malik Riaz and now it is expected to aid in the business of the parent company, Bahria Town, by providing housing finance to prospective investors.
According to a source privy to the official information of the bank, Escorts Investment Bank is in the process of developing Shariah-compliant Islamic products for housing and micro-financing segments, which will be offered to the market once the business activities resume. The move is said to be made in order to enhance the bank’s service portfolio for the customers seeking to purchase property for residential or investment purposes.
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However, the introduction of Sharia-compliant housing finance products is also likely aimed at supporting the parent company, Bahria Town, in the expansion of its various projects by providing a financing facility to the customers wishing to own housing units.
The bank has already issued an interest-based model (conventional banking) of housing finance for local and expatriate Pakistanis. However, the terms and conditions for this model are stricter than housing finance models offered by other banks. The interest rates charged by the EIBL are KIBOR plus 7 percent, which is also higher than the interest rates that most other banks charge for housing finance products.
Recently, Bahria Town announced a low-cost housing scheme in various cities for residents and overseas Pakistanis. This scheme is likely to attract customers towards its housing society and the bank as well.
Malik Riaz bought over 71 percent shares of Escorts Investment Bank Limited (EIBL) in 2017 along with its management control. EIBL is not a commercial bank and is considered a non-banking finance company in technical terms. Therefore, it is only regulated by the Securities and Exchange Commission of Pakistan (SECP) with no jurisdiction of the banking regulator.
After the acquisition, Malik Riaz injected a capital of Rs. 1.2 billion in the bank on behalf of Bahria Town, which improved the overall financial strength of the bank. By March 2020, the bank had managed to curtail the losses and reported a loss of Rs. 21.48 million as compared to Rs. 36.65 million for the corresponding period last year.
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