Bank lending to the housing and construction sector increased by an unprecedented 85% in calendar year 2021, while loan disbursements under the Prime Minister’s low-cost housing program also increased reached 38 billion rupees.
The State Bank of Pakistan (SBP) on Thursday announced very high growth in funding for the housing and construction sector, but it still fell short as the government wants to build 5 million houses over the course of his term of office ending next year.
“Registering an unprecedented 85pc growth, banks’ outstanding loans for the housing and construction sector increased from Rs163bn to Rs355bn in 2021,” the central bank said in a circular. In October 2020, the government introduced a marginal subsidy program, commonly known as Mera Pakistan Mera Ghar (MPMG), aimed at boosting the housing sector by providing cheaper loans to low-income families to build their own. House.
“Within the housing and construction portfolio, disbursements under the MPMG have increased by 38 billion rupees,” the SBP said. Since the end of the amnesty plan on June 30, 2021, the inflow of investment in the housing and construction sector has declined significantly. The builders have asked for an extension of the amnesty program, but the government seems determined not to extend it. The amnesty program allowed black money to join the industry, which artificially raised property prices across the country.
“Housing and construction finance, particularly under the MPMG, has seen impressive growth thanks to many enabling regulatory measures introduced after extensive stakeholder consultation,” the SBP said. The SBP said it advised banks to increase their housing and construction finance portfolios to at least 5% of their domestic private sector advances through December 2021. The central bank has also introduced a set of incentives and penalties to ensure compliance.
Habib Bank, Meezan Bank and Bank AL Habib were the top three contributors to the significant growth in housing and construction finance. These banks have also made significant progress in providing finance under the MPMG.
