PMRC signs agreement with 6 banks to promote affordable housing Govt program

Pakistan Mortgage Refinance Corporation, as Trustee of the Credit Guarantee Trust, on Monday signed a master guarantee agreement with six leading Islamic and conventional banks to promote affordable housing specially for the low- and informal-income segments of the society.

The CEOs of Meezan Bank Limited, Habib Bank Limited, BankIslami Pakistan Limited, Faysal Bank Limited, JS Bank Limited and Soneri Bank Limited signed this important agreement at a ceremony at a local hotel. This is ten-year credit guarantee scheme , which has been classified as liquid security by SBP.

Such agreement had already been signed with six financial institutions and Bank of Punjab. The Credit Guarantee Trust has been set up by the Government of Pakistan with the support of State Bank of Pakistan and is funded by World Bank.

PMRC’s Chief Executive Officer Muddasir Hussain Khan Mudassir H. Khan, on this occasion, said the Credit Guarantee Scheme would pave a way for the banking industry to extend housing finance to the low income group ; a market segment which had remained negligible for long.

He said PMRC had a role of a catalyst in mortgage market development in the country and for growth of affordable housing in the country.

He thanked SBP, Federal Ministry of Finance, World Bank and NAPHDA for their leadership and support to this sector , and for making Prime Minister Iman Khan’s vision of affordable housing a reality.

He said the two main tasks assigned to PMRC were : (1) to facilitate construction and housing sector especially the low cost housing (2) to help the country’s capital market grow fast.

SBP’s Deputy Governor Jameel Ahmed said signing of this agreement today would help boost the construction and housing industry; especially PM’s Naya Pakistan Housing Scheme for the low income group people. Besides, it would strengthen the country’s economy as a whole.

He said, in line with the Government’s vision, the Credit Guarantee Trust would provide risk coverage of up to 40 percent to primary mortgage financiers on first loss basis.

The guarantee would partially alleviate the credit risk of primary mortgage financiers and provide a conducive environment for banks to finance housing for the low-income population.

Keeping in view the dynamics of mortgage market and to facilitate market growth, the scheme had been designed for both conventional and Islamic banks, he said.

He said the risk coverage of mortgage portfolio under Government Markup Subsidy facility provided due comfort to banks in extending housing finance to the low income segment for buying or construction of new houses.

He urged the banking industry to benefit from this unprecedented facilitating environment and extend loans to their maximum potential.
He also emphasized on PMRC management to focus on developing secondary mortgage market through issuance of mortgage-backed securities in the capital market. This would provide liquidity to the construction and housing sector , and strengthen the capital market.
SBP’s Deputy Governor emphasized that all the stakeholders needed to make concerted efforts to achieve the goal of providing housing to the common people.

“ We all have to meet the challenge to provide a house to every family ( low and middle class) through affordable housing,” he asserted.

He, however, lauded the efforts by financial institutions over the last few months under the umbrella of Steering Committee on Housing and Construction Finance established by State Bank of Pakistan. Jameel Ahmed highlighted the initiatives taken by SBP to support and facilitate the construction and housing industry; mainly PM’s Naya Pakistan Housing Scheme.

Later, talking to media there, SBP’s Deputy Governor said that being the Central Bank, State Bank of Pakistan had been assigned the major role in promoting construction and housing industry, which was the second largest job provider sector and that many other industries were either directly or indirectly linked to it.

In the light of new developments and demand of the public, SBP along with other banks and financial institutions had been revising the credit facilities for this housing sector ; especially for NPHS, time to time.

To another query, he said the target of credit financing for the low cost housing scheme by December 31, 2021 was Rs 250 billion. The first quarter of this scheme will end on Dec.31, 2020 and the performance of the banks would be reviewed. The banks failing to meet their given credit targets would be penalized.

When his attention was drawn to the complaints that some banks were charging good amount from the applicants under NPHS as the processing charges, he said SBP had taken notice of such complaints.