State Bank of Pakistan announced regulatory relaxations for banks to encourage financing low cost and affordable housing for general public.
The statement of SBP reads that the relaxations by the state bank of Pakistan come as it understands that credit provision in this sector by commercial banks have been less than 1% of GDP “which is much lower than in other similar countries and in the region”.
The central bank of Pakistan said that “This is an important sector that has significant economic linkages with other sectors in the economy,”
The SBP suggesting that motivating banks into financing affordable housing so other sectors may benefit from this as well.
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, SBP said
It further added that 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.
The central bank of Pakistan said it understands that people from applying for low-cost housing finance may face difficulties in furnishing documentary evidence to establish credit-worthiness.
The statement of SBP reads that “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.”
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