KARACHI - Chairman and CEO, House building Finance Corporation Ltd (HBFCL) Azhar Abbas Jaffri has said that we have managed to reduce the losses to mere Rs28.36 million in 2009 as compared to Rs385.55 million in 2008. Reduction of loss by Rs357.197 is a major achievement of the new management. This loss figure could have been much less had we not provided for all pending expenses/financial costs which were previously not booked. Addressing a press conference in a local hotel, he said, this extraordinary turn-around has been possible by adopting a three pronged strategy keeping in view short, medium and long term objectives. He said that HBFCLs liquidity position has been severely affected in the last many years by the rising non-performing loans (NPLs), which are 41% of the total portfolio, as compared to an average 2-3% of other banks. Consequently, after meeting all the regulatory requirements not much liquidity was available for going in a big way. Hence, it was imperative that loans should be sanctioned very prudently. When people do not pay back their loan installments, it reduces HBFCLs capacity to give fresh loans. He added. He said that there is more than one reason for this high default rate. The foremost cause of default is that while lending to the borrowers in the past their repayment capacity was not given due weightage. Other reasons were: not enough emphasis on recovery of loans; ineffective foreclose laws; and in some cases the genuine problem of the borrowers owing to the high inflation in the country. He described the year 2009 as very challenging year for the economy in general and housing industry in particular, which finds itself in a kind of slump seldom witnessed before. Furthermore, he said, that inordinately high mark-up rates exasperated the already much reduced affordability of a buyer. This notion is authenticated by SBPs report on Housing Finance. Now, he said, a comprehensive credit policy has been developed. He said that a robust recovery drive was launched in 2009. As a result, against a target of Rs. 3.32 billion, a total of Rs3.5 billion collected in 2009 compared to Rs. 3.2 billion in 2008. An improvement of about 10% has been made despite poor law and order situation. He said that liquidity position of the organization has substantially improved and we are now fully geared-up to take-off and meet the substantially enhanced disbursement targets of 2010. He told the media that realizing the housing needs of the low and middle income groups of the country, an in-principle agreement has been reached with Saiban (a renowned NGO), for developing low-cost housing in its project at Lahore. A MOU is being executed for a pilot project of 50 houses. He said that HBFCs management also took some other bold initiatives to revive the institution including preparation of long term restructuring plan; Reactivation of Board of Directors; Compliance of SBP Inspection Report; Timely finalization of Annual Accounts; and Gear up efforts to get Rs. 2 billion by MoF which were pending release of since 2007.