SBP launches Sharia compliant loan facility for low cost housing

KARACHI: State Bank of Pakistan (SBP) on Monday launched Sharia compliant loans for low cost housing for special segments.

In a circular issued by the central bank stated that in order to facilitate availability of long-term affordable funding to some of the selective low income segments, SBP had launched a “Financing Facility for Low Cost Housing for Special Segments” through IH&SMEFD Circular No. 05 of 2019.

In this regard, SBP is also introducing a Mudarabah based “Islamic Financing Facility for Low Cost Housing for Special Segments” (The Facility) for Islamic Banking Institutions (IBIs) and Islamic DFIs; collectively referred as Participating Islamic Financial Institutions (PIFIs).

Salient features of the financing facility are as under:

Participants: All Banks/DFIs

Loan Amount: Up to Rs. 2.7 million

Refinance: Up to 100 percent by SBP

Scope: Widows, Children of martyrs, Special persons, Transgender, and Persons in areas severely affected by terrorism.

Eligibility of Borrower: First time home owner; Must not have availed housing finance previously; For construction of a new housing unit; Maximum value of the housing unit up to Rs. 3 million; The financing for plot to be purchased for constructing house shall be allowed upto Rs1 million only

Loan Tenor: Up to 12½ years

Under this facility, the central bank said that Mudarabah investment of SBP shall be available for up to 100 percent of the amount financed to eligible customers.

SBP shall make Mudarabah investment in general pool of the PIFI.

PIFIs may submit their requests for allocation / assignment of limits under this facility to be evaluated by SBP as per its internal criteria. Yearly limits shall be allocated to individual PIFI under the Scheme.

Applications for sanction of limits for each fiscal year (July-June basis) shall be sent by the interested PIFIs to the Director, Infrastructure, Housing & SME Finance Department, latest by May 15 each year to facilitate sanction of annual limits at the earliest.

For the current year, the request for sanction of limits may be submitted within 30 days from the date of issuance of this circular.

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