KARACHI: The State Bank of Pakistan (SBP) Friday announced increase in the mandatory target for financing of housing and construction of buildings from 5 percent to 7 percent of their domestic private sector credit.
With a view to promoting housing and construction of buildings in Pakistan, the State Bank, in July 2020, decided to advise mandatory targets to banks and accordingly, each bank was asked to ensure that the financing for housing and construction of buildings (Residential and Non-Residential) shall be at least 5 percent of their domestic private sector credit by December, 2021.
Now, the SBP has decided to further increase this target by 2 percent from 5 to 7 percent for this year (CY22). In order to further promote housing and construction finance, the SBP on Friday advised banks to increase financing for housing and construction of buildings (Residential and Non-Residential) to at least 7 percent of their respective domestic private sector advances by December, 2022.
The SBP already had directed banks to gear up their infrastructure and capacity to ensure compliance of meeting these targets. As per directive each bank is required to develop a concrete action plan with detailed measures and their timelines to achieve its housing and construction finance targets.
Housing and construction financing by the banks posted an unprecedented growth of 85 percent during calendar year 2021 (CY21) supported by the government of Pakistan special markup subsidy scheme “Mera Pakistan Mera Ghar” (MPMG).
Overall, banks’ outstanding credit for housing and construction increased by Rs 163 billion, from Rs 192 billion to Rs 355 billion end of the last year. Disbursements under Government Markup Subsidy scheme increased by Rs38 billion.
Cumulatively, the banks received requests of financing of Rs276 billion from potential customers during CY21 and the SBP is expecting that approvals and disbursements will keep growing during this year as well.
Copyright Business Recorder, 2022