SBP decision on extension of auto loans welcomed

Chairman of Chamber of Small traders Khalid Mehmood Qureshi has hailed the decision of the State Bank of Pakistan (SBP) to allow the banks/Development Finance Institutions (DFIs) to extend loans for the cost of ancillary item(s) like CNG kits, vehicle tracking device, ie Global Positioning System-commonly known as "Tracker" etc, while sanctioning auto loans for the ex-factory tax paid price fixed by the car manufacturers.
He said that the banks/DFIs should also be permitted to finance the premium charged by the dealers and/or investors over and above the ex-factory tax paid price of cars/vehicles, fixed by the manufacturers. He said in a press statement that it is a good decision, which would help in purchase of ancillary items. It may be recalled that a circular (BPRD Circular No 06) issued Wednesday, the Regulation R-11 of the Prudential Regulations for Consumer Financing has been substituted with the following:
"While allowing auto loans, the banks/DFIs shall ensure that the minimum down payment does not fall below 10 percent of the value of the car/vehicle. Furthermore, the banks/DFIs may extend auto loans for the ex-factory tax paid price fixed by the manufacturers and the cost of ancillary item(s) (like CNG kits, vehicle tracking device, ie Global Positioning System-commonly known as "Tracker" etc) desired by the borrower to be fitted in the car/vehicle.
However, the banks/DFIs shall not finance the premium charged by the dealers and/or investors over and above the ex-factory tax paid price of cars/vehicles, fixed by the manufacturers." The amendments in Regulation R-11 have been made in the light of the feedback received from banks/DFIs.