KARACHI: Banks approved over Rs59 billion till the end of August under the government’s flagship markup subsidy scheme Mera PakistanMera Ghar.

The State Bank of Pakistan (SBP) on Wednesday said that as a result of numerous measures taken by it and support of the government, lending for the housing finance scheme had picked up momentum.

The SBP said since the launch of scheme last year, applications for a cumulative Rs154 billion had been received by the banks while financing amounting to over Rs59bn had been approved till Aug 31 this year.

Similarly, pace of disbursement that was initially slow because of a number of factors had also picked up, it added.

Applications accepted from over 8,000 branches

By the end of last month, disbursement under the scheme has reached Rs11.5bn, showing an increase of around Rs3.8bn or 49 per cent in August 2021.

“On average, to date banks have approved 38pc of amount applied and 19pc of approved amount has been disbursed,” the central bank said.

These approval and disbursement ratios have similarly risen over the past few months as banks have put in place the needed upfront investment in procedures and technology to process applications for low-cost housing.

Banks disbursed amounts in different stages of construction or purchase. Thus the pace of disbursement is contingent upon the speed of construction and completion of purchasing process.

Since the announcement of the scheme last year, the SBP has taken various enabling steps such as introducing standardised and simple application form; adopting informal income assessment model; providing relaxations in prudential regulations; establishing help desks at all its field offices; and, designing a complaint portal supported by a network of focal persons of all banks across all geographical areas.

On the instructions of the SBP, banks are accepting applications from over 8,000 dedicated branches across the country. The central bank has also allocated targets to each bank under the scheme. An e-tracking system within each bank and a dedicated joint call centre for facilitation of the applicants has also been established.

The Naya Pakistan Housing Development Authority and Pakistan Banks’ Association, a representative body of banks, are fully supporting the scheme.

The central bank expects that with the ongoing efforts by it, government and banks, bank finance for the scheme will gain further momentum in the days to come.

However, the construction industry is highly skeptical about the success of the housing scheme on a large scale as per the government’s wishes, as the cost of construction has sharply increased due to inflation and devaluation of local currency.

Published in Dawn, September 9th, 2021