Banks approve Rs39bln under subsidised housing finance

ISLAMABAD: Banks have approved Rs39 billion under the government’s markup subsidy scheme for housing finance as of June 30 and the amount of loans applied for more than doubled in the last quarter of FY21 to Rs111 billion, the central bank’s governor said.

State Bank of Pakistan (SBP) Governor Reza Baqir told a meeting during FY21, housing and construction finance outstanding increased by Rs111 billion or 75 percent over FY20, reaching Rs259 billion by end June, 2021). An increase of this quantum in housing and construction finance in one year is unprecedented in Pakistan’s history. As a result, 97 percent of the overall target set by SBP for June 30, 2021 was met.

The meeting of the National Coordination Committee on Housing, Construction and Development on Wednesday was chaired by Prime Minister Imran Khan who expected banks’ housing finance portfolio to show strong growth in disbursements in the coming days.

Khan expressed the strong resolve of the government to accelerate activity in this area and encouraged banks to continue to support this area of economic activity and to facilitate customers interested in availing the government’s mark-up subsidy scheme for housing.

Baqir said in addition to strong growth in construction and housing finance, banks have started to extend housing finance under government markup subsidy scheme, commonly known as Mera Pakistan Mera Ghar (MPMG), for the low to middle income segments of the society.

The SBP governor said also informed the Prime Minister that following his instructions to facilitate the public as much as possible, a simple one-page application form has been designed separately for salaried persons, businessmen and applicants with informal income to apply for such housing finance. In order to facilitate applicants with informal income, some very basic personal information, and payment information about house rent, utilities and children education will be required. Forms will be available both in English and Urdu by July-end.

Baqir said to facilitate access to home finance especially within lower- and middle-income groups, State Bank’s key initiatives include allowing acceptance of third-party guarantee during the construction period, waiver of debt burden ratio in case of informal income and the introduction of standard facility offer letter by the banks. State Bank has also advised banks to develop and deploy income estimation models for borrowers with informal sources of income. In addition to gauge readiness, knowledge and appropriate behavior of banking staff towards MPMG customers, regular mystery shopping of banking branches on a pan Pakistan basis is conducted by State Bank.

In addition to State Bank’s dedicated online portal for the registration of complaints by MPMG customers, commercial banks have also established a 24/7 joint helpline to address the queries of general public regarding MPMG.