KARACHI: The State Bank of Pakistan (SBP) on Monday allowed banks and development finance institutions (DFIs) to invest 15 per cent of their equity, as against the existing limit of 10pc, in the Real Estate Investment Trusts (REITs) to boost the housing sector.

In line with government’s initiative for the development of the housing and construction sector, the central bank has made changes to certain provisions of existing Prudential Regulations for Corporate and Commercial Banking to encourage banks and DFIs enhanced participation in REITs, the SBP said in a statement.

“This move will not only bring more capital towards REITs but would also enable banks and DFIs to diversify their investments,” said the SBP.

REITs are asset management companies that own or finance income-producing real estate across a range of property sectors. These companies raise funding from general public and institutions by floating various kinds of funds and deploy these funds in real estate properties thereby enhancing the investment in housing and construction sector to contribute in economic growth and development. The units of listed REITs, are tradable on stock exchanges and offer a number of benefits to investors.

In addition, the SBP has also relaxed restriction, in existing regulations, on seeking financing against shares of listed group companies.

Published in Dawn, March 23rd, 2021