KARACHI: The State Bank of Pakistan (SBP) on Wednesday reported that banks’ lending for low-cost housing in the country was extremely poor, with disbursements reaching barely Rs18 billion against loan applications seeking Rs200bn.

In a statement issued on Wednesday, SBP Governor Dr Reza Baqir appreciated the progress made by the banking industry in supporting low-cost housing finance but stressed the need to accelerate the pace of approvals by banks to match the requests for financing to ensure that people are not discouraged by the processing time.

As per the latest numbers of October 18, banks have received applications of more than Rs200bn. The banks have approved financing of Rs78bn out of which Rs18bn has already been disbursed.

SBP governor urges stakeholders to increase outreach of Mera Pakistan Mera Ghar to people

Banks remained extreme­­ly cautious while lending for housing and construction despite support from the government and encouragement from the SBP.

The SBP governor expressed the hope that with the combined efforts of all stakeholders, the dream of Pakistanis to have their own homes can become a reality.

While appreciating the efforts, Mr Baqir also asked stakeholders to increase outreach of the Govern­ment’s Markup Subsidy Scheme for Housing Finance commonly known as Mera Pakistan Mera Ghar (MPMG) to the wider public.

He said that when the journey of MPMG started last year, low-cost housing finance was almost non-existent as commercial banks rarely ventured in this area fearing its inherent risks.

He said the housing and construction credit of banks has reached to Rs305 billion at the end of September 2021, which was Rs166bn at the end of September last year, showing an increase of Rs139bn and a year-on-year growth of 84pc.

In July 2020, State Bank of Pakistan advised commercial banks to increase their lending for housing and construction sectors to at least 5pc of their private domestic sector advances by December 2021. To assist in this, the SBP advised quarterly target to each bank after individual consultation, leading to concerted effort.

The focus on this segment increased and for the quarter ending Sept 30, 2021, banks had achieved 94pc of their assigned targets on a consolidated basis. During July-September 2021, banks increased their credit to housing and construction sector by Rs48bn from Rs257bn as of June 30, 2021.

The banks have also established a joint call center to address queries of general public regarding MPMG which was recently inaugurated by the SBP governor. General public can reach the call center at 0-33-77-786-786. This call center will help resolve complaints and assist common persons who would like to borrow under MPMG but face difficulties in completing the requirements of banks.

Published in Dawn, October 28th, 2021