Banks asked to meet home loan target or face penalty
The State Bank of Pakistan (SBP) has decided to impose penalty on banks if they fail to meet the mandatory targets for the number of houses and disbursement, said a circular.
"It has been decided that penalty will be imposed on banks falling short of their Government's Mark-up Subsidy Scheme (G-MSS) targets with effect from July 31, 2021 on both targets of number of housing units and amount of disbursements," said the central bank.
It appears that the banks are still reluctant to extend loans for the lowincome housing projects or houses creating frustration among the government's top ranks. The government's prime agenda was to provide 10 million jobs and 5 million low-income houses but after three years, there is no visible sign in this direction. The county is said to be facing a shortfall of 10 million houses.
Earlier, on 15 July 2020, the State Bank announced through a circular that it has decided to set a mandatory target for banks to extend mortgage loans and financing for developers and builders while the banks will be required to increase their housing and construction of building loan portfolios to at least 5 per cent of their private sector credit by the end of December 2021. The circular was issued following the government's Naya Pakistan Housing Scheme to build lowincome houses.
In April, the SBP assigned monthly mandatory targets of number of housing units and amount of disbursements to banks in proportion to share in total banking assets.
"A baseline penalty will be charged on shortfall from cumulative targets till July 31, 2021 while higher penalty will be charged on shortfall from targets of subsequent months," said the latest circular.