Success of Gedhoruveriya projects depend on timely payments: Shareef

Bank of Maldives (BML) CEO and Managing Director Mohamed Shareef urged that a timely and regular payment culture is the only way housing schemes can sustainably continue.

He said this during the launch ceremony of a loan scheme under the government's “Hiyavehi” financing program to provide housing at low interest rates.

"This scheme is not a form of free aid. This is a financing scheme. So it is important that everyone pays back their loan responsibly and in a timely manner," said Shareef.

He stated that schemes as a whole would face difficulties in the future if those who receive funds from important schemes such as this don't uphold their financial responsibilities.

"Along with this, if payment performance rates were to fall, schemes such as this will have low rates and concessions may not be a thing of the future. With how the banking system works, the financing rates and conditions from banks are determined after risk to the bank is assessed," said Shareef.

And so he repeatedly requested those who receive the financing to be responsible. He stated that their efforts in responsibly paying off their loans in a timely fashion would only empower future projects in a sustainable manner.

"Paying back loans is not something that is a responsibility tied to an agreement. It is something that provides affordable financing to all Maldivians and is important in maintaining the system in the future," said MD Shareef.

Offering loans at a low interest rate for the construction of houses and completion of houses that have seen a stoppage to its construction is a presidential pledge of President Dr. Mohamed Muizzu. In order to fulfill that pledge, the President introduced the "Hiyavehi Financing Scheme" late last year. The state budget has MVR 1 billion set aside in order to provide the loans this year.

The Hiyavehi Financing Scheme is being run by BML with these loans being issued under Islamic Financing policies in order to provide housing. BML has begun work on approving projects for the scheme.

BML said that the scheme is designed to provide financing at the lowest rate of 5 percent in order for houses to be built. 

Applicants will be granted a 25 year repayment period, along with an 18 month grace period. 20 percent of the equity can be provided by the customer or through the government. No additional mortgage is required; the building site serves as the sole collateral.

The government has decided that financing will be provided by BML, Maldives Islamic Bank (MIB) and Housing Development Financing Corporation (HDFC).