Staff Reporter
Karachi
State Bank of Pakistan has announced regulatory relaxations for banks to encourage financing low cost and affordable housing for people.
The relaxations by the central bank come as it understands that credit provision in this sector by commercial banks have been less than 1 per cent of GDP “which is much lower than in other similar countries and in the region”, their statement read.
“This is an important sector that has significant economic linkages with other sectors in the economy,” said the bank suggesting that motivating banks into financing affordable housing so other sectors may benefit from this as well.
According to SBP, the value of the housing unit has been increased from Rs 3 million to Rs 3.5 million with a maximum loan size increased from Rs 2.7 million to Rs 3.15 million.It says with the increase in the minimum loan facility, the banks will not only enjoy more markup subsidy facility on the credit but also the low-cost housing finance incentives as well.
Secondly, the banking regulator has now allowed commercial banks a relaxation on documentary evidence from borrowers. SBP said it understands that people from applying for low-cost housing finance may face difficulties in furnishing documentary evidence to establish credit-worthiness. “In order to facilitate financing for this segment, State Bank is urging the banks to use alternate methods to identify income sources and assess the creditworthiness of the borrower.”
