The durability of housing finance programmes is contingent on disciplined loan repayment, the Chief Executive Officer of the Bank of Maldives (BML), Mohamed Shareef, warned this week, cautioning against the perception that government-backed financing is equivalent to a grant.
At a ceremony to issue documents to recipients under the 'Hiyaavehi Financing scheme', Shareef said the success of the country’s housing projects rests on the consistent and timely fulfilment of repayment obligations.
“As the national bank, BML has a responsibility to support citizen-focused programmes such as the Hiyaavehi Scheme which aligns with our commitment to supporting Maldivian families in achieving their dream of homeownership," said Shareef. He added, "The Bank's progress is intrinsically linked to the nation's progress and the health of the Maldivian economy, making participation in such key national initiatives a core part of our mission.”
He stressed that the Hiyaavehi Financing scheme is explicitly not a grant and underscored that recipients must adhere strictly to repayment schedules. Repayment discipline, he said, is the decisive factor in determining whether the scheme, and others like it, can endure.
Shareef noted that lax financial discipline could undermine the entire programme. Failure to meet obligations, he said, would not only create difficulties for the scheme itself but could also jeopardise the possibility of launching similar initiatives under favourable terms, such as low interest rates and eased conditions. "When customers consistently repay the financing extended by the bank, it facilitates the opportunity for the bank to sustainably advance additional projects of this nature," Shareef said.
He went on to frame repayment as more than a contractual duty. "Repaying the financing is not solely a responsibility defined by a contractual agreement. It is a vital effort aimed at ensuring accessible financing remains available to all Maldivians and sustaining the integrity of that system for the future," he said.
The Hiyaavehi Financing Scheme was launched under a pledge by President Dr Mohamed Muizzu to expand access to affordable housing for citizens. BML is currently approving projects under the scheme, which offers the lowest financing rate in the market at 5 percent per annum.
The government-subsidised programme provides an extended repayment tenor of 25 years, an 18-month grace period, and a 20 percent equity requirement, which may be contributed by the customer or the government. The property under construction serves as the sole collateral. The bank is presently reviewing more than 1,400 applications and has pledged to complete processing in a timely manner.