House Building Finance Corporation: operating on income-sharing basis

The House Building Finance Corporation underwent some changes and saw results. The Pakistani firm began in 1952 primarily to aid the masses of refugees that came to Pakistan after its independence. The corporation's focus was first Karachi and then spread to other regions of the country. Both the federal and provincial governments appoint the directors of the firm, while the managing director is federally appointed. Although the firm had previously depended on interest-bearing loans from the State Bank and had itself made loans at interest, it now operates on an income-sharing scheme. The author reports that in the short period (July, 1979, to June, 1983) since the new scheme was introduced, the group approved investments adding up to more than its total during the previous 27 years, when interest was the norm. Furthermore, there have been no major difficulties in adopting the new scheme. This data suggests that the new strategy is a successful one.