​SBP Relaxes Terms for Banks to Promote Housing Finance

State Bank of Pakistan (SBP) has relaxed banks’ terms and conditions for promoting housing finance across the country to benefit the masses and increase contribution by banks to the economy.

Accordingly, the banks could easily lease or finance property of Rs 3 million without the hectic procedure of getting third party valuation and assessment from valuators approved by Pakistan Banks Association (PBA). Now they can use their internal resources to assess the value of market for financing and issuance of loans to consumers.

This step will boost housing finance products of various conventional and Islamic Banks for customers who want to own property.

The banks/DFIs are also encouraged to provide terms and conditions in Urdu language

According to statistics by State Bank of Pakistan (SBP), housing finance witnessed a handsome growth in 2016 as banks benefited hundreds of customers with nearly Rs 7.2 billion in loans and financing.

Cutoff Limits for Property Valuation

Housing finance up to Rs. 10 million is subject to assessment of the property by at least one valuator listed on PBA approved panel and the housing finance above Rs. 10 million should be subject to assessment of the property by at least two valuators listed on PBA approved panel.

The new regulations said that the borrower can avail additional housing finance after the completion of two (02) years instead of three (03) years from the last date of disbursement. Moreover, the time to avail Balance Transfer Facility (BTF) in housing finance has also been reduced to eighteen (18) months from three (03) years.

The banks/DFIs are also encouraged to provide terms and conditions in Urdu language for better understanding of the customers and read out the same to the customers before finalizing the documentation process.

All terms and rules should be clearly communicated to customers: SBP

SPB directed that banks /DFIs shall clearly disclose, all the important terms, conditions, fees, charges and penalties and inter-alia which include annualized percentage rate, pre-payment penalties and the conditions.

Banks/DFIs are advised to ensure circulation of these regulations among all their offices/branches for meticulous compliance in letter and spirit so that consumers can be facilitated.

The rise in housing finance is not only meeting the requirement of consumers and financially beneficial for banks, it also plays a vital role in increasing economic growth through positive changes in 40 industries allied to housing sector. It will also generate hundreds of thousands of jobs.


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