KARACHI, Nov 7: The National Bank of Pakistan plans to offer about Rs2.5 billion loans for housing construction and housing purchase to low income group people in the next four years.
The loans will be provided under a scheme, which is being sponsored in collaboration with a US-based social venture — Acumen Fund — for which the mortgage guarantee is being offered by American federal agency Overseas Private Investment Corporation (OPIC).“The agreement with Acumen Fund and OPIC is almost finalised and now we are involved in small legal issues and hope to move ahead with disbursement of mortgage loans sometimes in early 2007,” a senior executive of the NBP said adding the scheme targets low income group people to help them construct or purchase a house in remoter areas of the country.
By next year, the NBP will be involved in operation of three popular welfare schemes that should give a boost to the ruling coalition in vote capturing. These are the housing loan scheme for low income people, the Rozgar scheme for the unemployed and the infrastructure development programme for which the funds will be released for each of more than 100 districts of the country by the bank.
“Never before in last more than 55 years of operation, the NBP was given such a big role to mobilise political support for any government of the day as has been given now,” said a senior executive of a bank, which was also a candidate to participate in Acumen Fund scheme but failed to get a favourable response.
Acumen Fund has invited letters of interest from more than half a dozen banks in Pakistan to be its partner in social uplift of the disadvantaged section of the population. The NBP officials claim that after a thorough and professional due diligence by a reputed private consultant, their bank was selected to be a partner of Acumen Fund.
“The NBP was selected as a participatory partner of Acumen Fund after the consultant found its systems sound, the reach of branch network to the targeted section of population and above all the capacity of the institution to take up a social responsibility,” he said.
In collaboration with Acumen Fund and the OPIC, the NBP has structured a mortgage partnership facility as part of risk-sharing arrangement to address the housing needs of the low income groups in Pakistan. “The mortgage guarantee will be of $5 million for a period of 15 years, the executive disclosed.
Under this facility the NBP plans to build up a mortgage portfolio of $40 million (roughly Rs2.5 billion) in a span of four years.The Acumen Fund is an American social venture fund that invests in enterprises that provide services and products to those, who make less than $4 a day (about Rs250 a day). The OPIC is a federal agency to promote private investment in developing countries.
According to the bank official the target of NBP new scheme are those earning up to Rs15,000 a month who can afford payment of a loan instalment of Rs7,500. The terms and conditions of this loaning will not differ much from the facility being offered under Saiban by the bank. Under Saiban, the NBP offers loans without any limit and the average loaning is about Rs30 to 35 million. The clientele is drawn from the developers and constructors and the emerging new rich class of the financial sector executives whose income showed quantum jump from fabulous profits of the banks.