KARACHI: The State Bank of Pakistan on Thursday said that housing and construction finance in FY21 saw a remarkable increase of Rs111 billion or 75 per cent to reach Rs259bn compared to FY20.

The information was provided by SBP Governor Dr Reza Baqir during a meeting of the National Coordination Committee on Housing, Construction and Development (NCCHCD) chaired by Prime Minister Imran Khan.

“About 97pc of the overall target set by State Bank for June 30, 2021 was met,” the SBP official said, adding that an increase of this quantum in housing and construction finance in one year is unprecedented in Pakistan’s history.

However, the prime minister stressed that banks’ portfolio must show strong growth in disbursements of loans in the coming days, the SBP said.

Official says 97pc of the overall target set for June 30 has been met

The NCCHCD meeting was attended by federal ministers for finance, information, aviation, and climate change, chairman NAPHDA, minister of state for information and broadcasting, special assistant to the prime minister on political communication, presidents and CEOs of banks and senior SBP officials.

In July 2020, the SBP, in line with government’s vision to promote the housing and construction sector activities and improve home ownership in the country, mandated banks to increase their housing and construction finance portfolio to at least 5pc of their private sector advances by December 2021.

The SBP set quarterly targets with the mutual consent of presidents and CEOs of banks, supported by an inc­e­ntive and penalty framework to motivate banks to achieve these goals.

On the occasion, Dr Baqir said that in addition to strong growth in construction and housing finance, banks have started to extend housing finance under the Government Markup Subsidy Scheme — popularly known as ‘Mera Pakistan, Mera Ghar’ (MPMG) — for the low to middle-income segments of the society.

In April 2021, banks were given separate targets under the MPMG to induce them to grow this segment of housing finance. Consequently, the number of applications increased significantly and the amount of loans applied for more than doubled in the last quarter of FY21.

“As of June 30, 2021, banks have approved home financing worth Rs39 billion,” said the SBP.

The SBP governor also informed the premier that a simple one-page application form has been designed separately for salaried persons, businessmen and applicants with informal income to apply for such housing finance. Forms will be available both in English and Urdu by end of July.

To facilitate access to home finance, especially for lower and middle-income groups, the SBP’s key initiatives include allowing acceptance of third-party guarantee during the construction period, waiver of debt burden ratio in case of informal income and the introduction of standard facility offer letter by the banks.

In addition to the SBP’s dedicated online portal for the registration of complaints by MPMG customers, commercial banks have also established a 24/7 joint helpline to address the queries of general public regarding the MPMG. Customers of the MPMG can reach out to this helpline at 0-33-77-786-786.

Published in Dawn, July 16th, 2021