• NA panel warns against banks’ 90-day takeover powers
• Defers bill directing borrower safeguards, due process

ISLAMABAD: In a move to encourage lending to the housing sector, the government has decided in principle to grant commercial banks significant powers to take over mortgaged houses in the event of default, after a cumulative 90-day notice period.

The proposed foreclosure law to amend “The Financial Institutions (Recovery of Finances) Ordinance 2001”, currently under review by the National Assembly’s Standing Committee on Finance and Revenue, provides that where a customer defaults on payment of mortgage dues, the financial institution may issue three notices of 30 days each, “demanding payment of the outstanding mortgage amount”.

“In case of default in payment by a customer after service of the final (third) notice, the financial institution may proceed with the sale of the housing unit, provided that all notices have been duly served upon the mortgagor, who has remained in default of payment of mortgage dues or any part thereof.”

NA panel warns against banks’ 90-day takeover powers

The standing committee, which met on Thursday with Syed Naveed Qamar in the chair, raised serious reservations about the drastic conditions, which appear to favour commercial banks over customers.

The committee “expressed concerns over provisions that could potentially grant banks excessive powers in the foreclosure process,” it said in a written statement at the conclusion of the meeting.

Members of the panel emphasised that while an effective legal framework was essential to promote mortgage financing and safeguard the interests of lending institutions, adequate legal protections and due process must also be ensured to protect borrowers from arbitrary or unfair actions.

After detailed deliberations, the committee deferred the bill to its next meeting, directing the secretary of the Ministry of Housing and Works to circulate the revised draft to all members for further review and input before its finalisation in the next meeting.

Mr Qamar said that affordable housing finance must genuinely serve deserving low-income families through transparent, accountable, and inclusive mechanisms, and stressed the urgent need for robust foreclosure and recovery laws to strengthen Pakistan’s underdeveloped mortgage finance sector and enhance financial institutions’ confidence in expanding long-term housing finance.

The federal secretaries of finance, housing and works, and law and justice, also briefed the committee members on the Prime Minister Apna Ghar Programme (PM-AGP), its implementation framework, and proposed reforms relating to housing finance and foreclosure laws.

Housing Ministry Secretary, retired Captain Mehmood Ahmad, told the meeting that the PM-AGP was a subsidised housing finance initiative aimed at enabling low and middle-income families to own homes, while promoting economic activity and revitalising the construction sector. Approved in August 2025 and revised in March, the scheme offers financing of up to Rs10 million for first-time homeowners at a fixed markup rate of 5pc, repayable over 20 years with a 90:10 financing ratio.

As of April 30, 2026, a total of 25,304 applications had been received, of which 8,990 applications involving Rs37.154bn were approved, while Rs5.071bn had been disbursed to 1,845 beneficiaries.

The meeting was also informed that Pakistan’s housing finance sector remained underdeveloped, with mortgage financing contributing only 0.3pc to the GDP and 0.56pc to total private sector credit.

The government had, therefore, set a target of financing 500,000 housing units over the next four years, requiring an estimated Rs3.2tr in financing.

Responding to a question, Finance Secretary Imdadullah Bosal said the government did not have Rs3.2tr in fiscal space, but, given the prime minister’s priority initiative, the funding would have to be

Published in Dawn, May 8th, 2026