KARACHI: The Pakistan Mortgage Refinance Company (PMRC) will provide liquidity to banks for making people’s access to housing loans easier, while fixed-rate bonds could be launched by next year, N.K. Rupan, CEO of PMRC, told Dawn on Saturday.

The company’s shareholders agreement was signed on Saturday. The government (National Bank of Pakistan and Ministry of Finance) holds 49 per cent while private sector banks hold the majority 51pc stake.

Mr Rupan, who gained recognition after leading a successful housing development project in Malaysia, has been hired to develop housing in Pakistan.

“Main problem is that banks in Pakistan have no long-term liquidity to finance housing in Pakistan. Our primary role is to provide medium and long-term liquidity to them so they can lend for housing, which has a huge potential for development,” said Rupan.

He said the country faces shortage of houses and demand is growing at the rate of 0.4 million to 0.7m houses per year mainly in the middle and low-income segments.

“The PMRC’s other job is to develop fixed-rate bonds market in Pakistan. There is no fixed bonds market in this country except the government’s Pakistan Investment Bonds. Corporate sectors would welcome these bonds and the PMRC will generate liquidity for housing in the country,” Rupan continued. Bonds would be launched by next year subject to market condition in the country, he added.

He said PMRC is expected to provide liquidity to banks from May this year and initially this would be provided through credit line from World Bank, which has approved a $140m credit line for PMRC.

The company would not disturb the market mechanism of banks and would not force them to charge a certain margin of profits. The World Bank is providing concessional loans to PMRC which means liquidity would be provided at a low interest but no rate has been fixed by the PMRC for banks.

Banks are willing to finance low-cost housing as National Bank has recently signed an agreement with the KP government to finance 0.2m house for employees. So far, the outstanding amount regarding the housing finance portfolio was Rs80 billion by December 2017 which was extremely poor in a country facing a shortage of houses up to 10m.

PMRC’s shareholders comprise the Government of Pakistan - Ministry of Finance, Habib Bank Ltd, United Bank Ltd, National Bank of Pakistan, Askari Commercial Bank Ltd, Allied Bank Ltd, Bank Alfalah, Bank Al Habib and House Building Finance Company.

Speaking at the signing ceremony of the shareholders, State Bank of Pakistan’s Deputy Governor Jameel Ahmed said the supply and demand side housing issues are getting complex, giving rise to irregular settlements in the country. In Karachi alone, there are 562 kachi abadies (irregular settlements) and these are becoming the breeding ground of crimes.

Published in Dawn, April 15th, 2018