July 26, 2003	Saturday	Jumadi-ul-Awwal 25, 1424

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KARACHI, July 25: Finance Minister Shaukat Aziz presided over the launching of National Bank of Pakistan’s ‘Saibaan’ (Shelter) housing scheme on Friday.

This housing loan scheme is a structured product designed to meet the housing loan demand of those who earn as low as Rs5,000 a month and for those who earn Rs50,000 and more.

“Corporate lending rules do not apply to consumer financing and housing loan operations,” the finance minister clarified in his brief remarks, urging the bankers to go for a refresher course if they had no orientation for such a business.

“Everything is different in housing loans,” he stressed, and pointed out that there were different parametres to judge the viability of the applicant. “The risk score is different and, for that matter, the entire operation is different from what bankers in Pakistan have been accustomed to.”

But then there is immense potential in the housing loan business. Besides being a business, it is also a social duty that banks would do by providing a roof over the heads of fellow citizens.

Shaukat Aziz reminded the audience in the NBP conference hall that appropriate measures had been taken in the budget to give a boost to the construction industry. “The construction industry is a big job creator,” he pointed out, adding that construction activity “stimulates 40 categories of industries” and “is a big catalyst in generating economic activity.”

Housing finance has been a low priority business for banks in Pakistan where housing loans are hardly one per cent of the GDP. “Compare it with USA where housing finance is 50 per cent of total debt stock and 36 per cent in most European countries.”

He lauded the NBP for taking initiative by launching the housing loan scheme “which is now both a challenge and an opportunity.

The minister said that at a certain interest rate level the payment of instalment of a housing loan is more or less equal to that of rent of a house. “You build your equity when you pay housing loan instalment,” he said.

The bank plans to disburse Rs40 billion housing loans for 100,000 housing units. Four products are being offered to purchase, construct, improve and invest in housing.