Housing loan disbursement surges 84% by September State Bank of Pakistan

Housing loan disbursement surges 84% by September

KARACHI: Housing and construction loan disbursement by banks has reached Rs305 billion by the end of September 2021, which was Rs166 billion at the end of September last year, showing an increase of Rs139 billion and a year-on-year growth of 84 per cent, the State Bank of Pakistan (SBP) said on Wednesday.

The banks have also received applications worth Rs200 billion for low-cost housing financing under Mera Pakistan Mera Ghar (MPMG) scheme.

The SBP said that as per the latest numbers of October 18, 2021, banks have received applications of more than Rs200 billion. The banks have approved financing of Rs78 billion out of which Rs18 billion have already been disbursed.

SBP Governor Dr. Reza Baqir appreciated the progress made by the banking industry in supporting low-cost housing finance for first time homeowners under the Mera Pakistan Mera Ghar.

At the same time, the Governor stressed the need to accelerate the pace of approvals by banks to match the requests for financing to ensure that people are not discouraged by the processing time. He expressed the hope that with the combined efforts of all stakeholders, the dream of Pakistanis to have their own homes can become a reality.

While appreciating the efforts to date, Governor Baqir also asked stakeholders to increase the outreach of the Government’s Markup Subsidy Scheme for Housing Finance commonly known as Mera Pakistan MeraGhar (MPMG) to the wider public. He said that when the journey of MPMG started last year, low-cost housing finance was almost non-existent as commercial banks rarely ventured in this area fearing its inherent risks.

However, the strong commitment of the government especially NAPHDA, SBP, banks, and other stakeholders to promote housing and construction activities in the country is beginning to result in a considerable increase in finance for housing and construction.

To augment this effort the SBP provided an enabling regulatory environment to promote housing & construction finance.

In July 2020, State Bank of Pakistan advised commercial banks to increase their lending for housing and construction sectors to at least 5 percent of their private domestic sector advances by December 2021.

To assist in this, the State Bank advised quarterly targets to each bank after individual consultation, leading to the concerted effort. The focus on this segment increased and for the quarter ending September 30, 2021, banks have achieved 94 percent of their assigned targets on a consolidated basis. During July-September 2021, banks increased their credit to the housing and construction sector by Rs48 billion from Rs257 billion as of June 30, 2021.

An increase in credit to the housing and construction sector reflects that banks have realigned their internal policy dimension/ strategic focus towards the development of housing and construction. The banks have, in recent months, revamped their systems and procedures, upgraded and streamlined technological platforms, and motivated their banking staff through incentives and training.

The banks have also established a joint call center to address queries of the general public regarding MPMG which was recently inaugurated by the Governor SBP. The general public can reach the call center at 0-33-77-786-786. This call center will help resolve complaints and assist common persons who would like to borrow under MPMG but face difficulties in completing the requirements of banks.  Earlier, State Bank launched a user-friendly online complaint resolution mechanism in January 2021. The complaint resolution mechanism comprises an IT-based portal supported by a comprehensive network of State Bank and commercial bank staff to take care of problems faced by applicants and resolves complaints within a predefined timeline with proper escalation mechanism.

Some of the other steps taken by SBP in collaboration with NAPHDA, other government agencies, banks and stakeholders include a simplified loan application, standard facility offer letter, amendment in the prudential framework, development of standard risk assessment criteria for builders/developers, development of income proxy model and streamlined financing documents.

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