“Within the housing and construction portfolio, disbursements under the government markup subsidy scheme, known as Mera Pakistan Mera Ghar (MPMG), increased by Rs38 billion,” said a statement from the State Bank of Pakistan (SBP) on Thursday.
Housing and construction finance recorded a jump of Rs163 billion, or 85%, in 2021 as it amounted to Rs355 billion.
Financing to the housing and construction segment, particularly under the MPMG scheme, registered an impressive growth on the back of many enabling regulatory measures introduced after extensive consultations with stakeholders.
It added that housing finance had stood at Rs192 billion in 2020.
The statement detailed that financing under MPMG picked up momentum in 2021 as approvals by banks grew from near zero to Rs117 billion during the year.
The SBP also advised banks to increase their housing and construction finance portfolios to at least 5% of their domestic private sector advances till December 2021, introducing a set of incentives and penalties to ensure compliance.
Banks have received applications for Rs276 billion worth of assistance from potential customers, which indicated that approvals and disbursements will keep growing in the coming months, the SBP said.
The central bank said that it had taken a number of steps to create an enabling regulatory environment for banks to increase the flow of financing to the housing sector.
Key initiatives included permitting acceptance of third-party guarantee during the construction period, waiver of debt burden ratio (DBR) in case of informal income and the introduction of standard facility offer letter by banks. “The State Bank of Pakistan also advised banks to develop and deploy income estimation models for borrowers with informal sources of income,” it said.
Published in The Express Tribune, January 7th, 2022. Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.