MPMG scheme: conditional lending allowed

KARACHI: The federal government has conditionally allowed banks and financial institutions to disburse financing under the Mera Pakistan Mera Ghar (MPMG) housing finance scheme for approved cases.

Although, the federal government has allowed disbursement under the MPMG- government’s Mark-up Subsidy Scheme for Housing Finance, however, the participating institutions have been asked to charge 250 basis points (bps) spread over and above Kibor instead of maximum spread of 400 bps currently allowed under Tier 2 and 3 of MPMG housing finance scheme.

The low-cost housing scheme MPMG was suspended by the federal government on June 30, 2022. Accordingly, the State Bank of Pakistan (SBP) advised banks to put further disbursements of financing under MPMG on hold from July 1, 2022 till August 31, 2022.

In this regard, on Monday, the federal government decided to allow banks, DFIs and MFBs to disburse financing as per existing terms of MPMG in respect of cases approved and meeting any of the following conditions on or before June 30, 2022 subject to observance of condition at para 3:

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a) Approved cases (purchase and/or construction) pending for disbursement due to any legal formality. All pre-disbursement formalities have been done and bank has communicated the same (Being in advance stages, these customers have completed almost all pre-disbursement formalities, paid token money and incurred all incidental expenses (legal & processing fee, etc). This refers to Benchmark 1 against which the SBP has solicited data from banks on July 7, 2022.

b) Approved cases where customers have entered into agreements, paid token money and obtained property documents from sellers or in case of construction loans, PTM/Fard for loan has already been issued. (These cases are just short of ‘approved cases pending for disbursement’ (Benchmark 1), as in such cases, a few internal procedures of banks may still be required to be completed but the borrowers have incurred all major costs/expenses based on approvals from banks). This refers to Benchmark 2 against which the SBP has solicited data from banks on July 7, 2022.

c) Peri-urban/NAPHDA project(s) cases where down payment has been received from customer. This refers to Benchmark 5 against which the SBP has solicited data from banks on July 7, 2022.

Further, the federal government has decided that spread of banks and development finance institutions (DFIs) on the disbursements against cases mentioned at (a) and (b) above and falling under Tier 2 and 3 of MPMG will be maximum of 250 bps over and above Kibor (instead of maximum allowed spread of 400 bps currently allowed).

The SBP has advised banks, DFIs and MFBs to ensure that markup subsidy claims in respect of disbursements against above allowed customers are invariably accompanied by certificates of their respective internal audit departments verifying meticulous compliance with above conditions and other features of MPMG.

The State Bank said that it will also conduct inspection of these cases during regular or special inspection of the bank, DFI and MFBs.

The SBP reiterated that the government of Pakistan is still in process of reviewing and revising features of the MPMG scheme.

Therefore, all other cases except those mentioned above at para 2 will be considered as and when revised features are announced by the government.

Copyright Business Recorder, 2022