New rules limit property paperwork, allow lien-based security for housing finance up to Rs5 million and ease collateral requirements for renewable-energy financing.
KARACHI: The State Bank of Pakistan (SBP) has amended its prudential regulations to simplify documentation requirements for housing finance, aiming to facilitate customers seeking loans from banks and development finance institutions (DFIs).
In a circular issued on Friday, the central bank revised Prudential Regulation HF-7, covering title documents and security arrangements, following its earlier circular dated August 18, 2026.
Under the revised rules, banks and DFIs are required to obtain only the title and ownership-related property documents specified in Annexure B to secure housing finance.
Financial institutions must also provide borrowers with a signed acknowledgement listing all title and property documents received, ensuring a clear record of the paperwork submitted for loan processing.
Simplified Property Security Requirements
The SBP has stipulated that a house, apartment or plot financed by a bank or DFI must generally be mortgaged in favour of the lending institution through an equitable or registered mortgage.
However, the revised regulation provides an alternative for housing finance of up to Rs5 million. Banks and DFIs may extend financing by marking a lien on the property in the records of the relevant land-record authority.
The provision offers lenders an additional option for securing smaller housing loans without requiring the same mortgage arrangements specified under the general framework.
Renewable-Energy Financing Gets Flexibility
The revised regulation also provides flexibility for financing renewable-energy installations.
Banks and DFIs may extend renewable-energy financing without security or against hypothecation of the installed assets. These assets include solar panels, inverters, batteries and related equipment.
The change could facilitate access to financing for customers seeking to install renewable-energy systems by allowing lenders to determine security arrangements within the revised regulatory framework.
Banks Directed to Ensure Compliance
The central bank has directed all banks and DFIs to ensure strict compliance with the amended prudential regulations.
The SBP said all other existing instructions would remain unchanged.
The amendments form part of the regulator’s efforts to standardise and simplify housing-finance documentation while maintaining requirements for securing loans and protecting lenders’ interests.