KARACHI: The housing and construction finance portfolio of banking sector has recorded an unprecedented surge as it reached at Rs.202 billion in March 2021 from Rs.148 billion by the end of June 2020.
A growth of Rs.54 billion or 36% in three quarters of FY 20-21 compared to a stagnant position in earlier quarters is manifest that housing and construction finance by banking sector has been progressing significantly and a momentum in the sectors was building up as a result of the recent measures by the GoP and SBP under the “Mera Pakistan Mera Ghar Housing Finance Scheme”.
A joint statement of SBP and Pakistan Banks Association (PBA) issued here on Tuesday further informed that up to April 20, 2021 banks had received applications for financing of more than Rs.52 billion from the general public under the scheme.
Of those, the banks have approved financing of more than Rs.15 billion to the applicants while the remaining applications were at different stages of the evaluation and approval process.
The government of Pakistan envisions to increase the number of housing units manifold in coming years and has taken several measures to improve housing sector and boosting economic activities in the county.
A key element to ensure sustainable increase in the construction of building activities was the provision of financing both to the supply and demand side players of the housing and construction sector.
So SBP has taken several measures since July 2020 to support the provision of financing for the housing and construction sector by way of giving incentives and targets to the banks, it added.
The central bank has assigned mandatory targets to banks to increase financing for mortgages to builders and developers while banks were required to increase their H&C finance portfolios to at least 5 percent of their private sector advances by end December 2021.
To ensure that a vast majority of masses could benefit from the Mera Pakistan Mera Ghar scheme, the SBP with the help of PBA was not only making application process easier but was also assisting in case they face any difficulty or have complaints.
The commercial Banks, besides carrying out mass awareness campaigns, have designated 50% of their branches, around 7,700, across the country for accepting applications under the scheme. In addition, all the remaining branches were also providing basic information about the scheme and refer applicants to the designated branches.
In order to address complaints, the State Bank has established a comprehensive complaint resolution mechanism which comprises of an internet portal supported by a network of State Bank and commercial bank staff. The IT portal is live for registration of complaints by applicants who face any difficulty in obtaining loans.
State Bank has also established help desks in its 16 offices across the country to facilitate applicants in registration of their complaints through the IT portal. These help desks address access challenges of applicants, especially from low-income strata, arising out of potential language and technology barriers.
On the other hand, PBA would soon establish a single call center to address applicant’s questions and to guide them towards their nearest branches to submit application for home loans.
To do away with the difficulties in providing documentary evidence of regular sources of income to prove their ability to repay, the SBP was coordinating with banks to develop a mechanism whereby income proxies, based on demonstrated expenses like rent payments or utility bills, could be used for credit evaluation and income assessment, the statement noted.