KARACHI: State Bank of Pakistan (SBP) on Wednesday fixed mandatory targets of housing loan disbursement for banks in order to promote housing and construction of buildings in the country.
The central bank in a notification said that with a view to promote housing and construction of buildings (Residential and Non-Residential) in Pakistan, the SBP decided to advise mandatory targets to the banks.
“Accordingly, each bank shall ensure that the financing for housing and construction of buildings (Residential and Non-Residential) shall be at least 5 percent of their domestic private sector credit by December, 2021,” the notification stated.
The banks are advised to gear up their infrastructure and capacity to ensure compliance of meeting these targets.
Accordingly, each bank is required to develop a concrete action plan with detailed measures and their timelines to achieve its housing and construction finance targets.
This action plan should contain breakdown of overall targets into quarterly targets, development of suitable products, launching of media campaigns, development of internal technology, capacity building of staff, and other actions needed to ensure the 5 percent target is met.
The SBP directed the banks to submit their concrete action plans to this department within 15 working days.
Banks will be required to report data of approvals and disbursements against these targets on monthly basis starting from September 2020.
The central bank said that it will keep a close monitoring of progress on the mandatory targets. Non-compliance in meeting the targets shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.