Home loan disbursements increase 80% in 5MFY22 – Journal

KARACHI: Disbursements on low-cost home loans jumped 80% in the first five months of the current fiscal year, apparently due to an increasing burden of applications and a warning from the State Bank from Pakistan (SBP) to banks for meeting targets or facing sanctions.

According to SBP data, disbursement increased by 23.5 billion rupees during the July-November period. Bankers said there were several reasons for a sudden surge in loan disbursements, while the main reason was the continued threat of sanctions from the government and the central bank.

Data showed that the disbursement for Mera Pakistan Mera Ghar Scheme (MPMG) was only Rs32 million at the end of December 2020.

Progress was extremely slow initially as it reached 5.223 billion rupees at the end of June 2021.

In view of the slow progress, the SBP and the government began to put pressure on the banks by forcing them to allocate 5% of their housing and construction loans to achieve higher economic growth and create a large number of banks. ‘jobs.

Bankers attribute sharp rise to persistent threat of government and SBP sanctions

On July 15, 2020, the SBP set a mandatory target for banks to expand mortgage lending and financing for developers and builders while banks will be required to increase their housing and building loan portfolios at the construction to at least 5% of their credit to the private sector by the end of December 2021.

The central bank has also decided to impose sanctions on banks that fail to meet their G-MSS targets as of July 31, 2021 – both housing counts and disbursements.

Data from January to November of the 2021 calendar showed that banks disbursed a total of Rs 28.744 billion against approved loans of Rs 99.7 billion.

However, the total loan demand reached 244.9 billion rupees at the end of November following an upsurge in requests.

In April, the SBP assigned banks mandatory monthly targets for number of housing units and amount of disbursements (the G-MSS targets the profit margin subsidy program) to banks in proportion to their share in total disbursements. bank assets.

The central bank said a base penalty will be imposed for a deficit against cumulative targets until July 31, 2021, while a higher penalty will be applied for a shortfall against targets for subsequent months.

The disbursement continued to increase each month of fiscal year 22 while the highest Rs6.5 billion was in November. Previously, 5.3 billion rupees were distributed in October, 5.4 billion rupees in September, 3.8 billion rupees in August and 2.5 billion rupees in July.

Prior to the start of FY22, the Pakistan Bank Association (PBA), in a consultative process, developed and disseminated among banks a benchmark income estimation model.

The SBP believes that this estimation model should alleviate the difficulties encountered by the general public in availing of housing finance.

Posted in Dawn, le 11 December 2021

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