KARACHI: The State Bank of Pakistan (SBP) said Thursday that housing and construction finance saw “unprecedented” growth of 85 per cent during 2021.
Bank financing for houses and construction increased by Rs163 billion to Rs355bn from Rs192bn, the central bank said, adding loan disbursements under the Government Markup Subsidy scheme, also known as Mera Pakistan Mera Ghar (MPMG), increased by Rs38bn.
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It said housing and construction finance, particularly under the MPMG, witnessed impressive growth on the back of an enabling regulatory environment introduced after extensive consultation with the stakeholders and the SBP advice to the banks to increase their housing and construction finance portfolios to at least 5 per cent of their domestic private sector advances till Dec 2021 beside introducing a set of incentives and penalties to ensure the compliance.
“Banks also made significant progress in the provision of financing under MPMG scheme, introduced in 2020. Financing under MPMG picked up momentum in 2021 as approvals for financing by banks grew from near zero to Rs117 billion in 2021,” the SBP said.
“The banks have received requests of financing of Rs276 billion from potential customers, which indicates that approvals and disbursements will keep growing in coming months.”
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The central bank has taken a number of steps to create an enabling regulatory environment for banks to increase flow of financing to the housing sector.
The key initiatives include allowing acceptance of third party guarantee during the construction period, waiver of Debt Burden Ratio (DBR) in case of informal income and the introduction of standard facility offer letter by the banks.
The 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, the central bank is conducting regular mystery shopping surveys of bank branches all over the country.
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