For housing finance: SBP considers credit guarantee scheme

Deputy governor wants central bank to fulfill its role.

LAHORE: The State Bank of Pakistan (SBP) is considering introducing a credit guarantee scheme for low-cost housing finance with the help of the federal government in order to fulfill its role in the development of housing finance in the country, said SBP Deputy Governor Saeed Ahmad on Tuesday.

“The housing finance portfolio of Pakistan saw a significant yearly increase of more than 9% due to SBP efforts in creating a regulatory environment for housing finance,” said Ahmad at an awareness seminar. “As a result, around 24 financial institutions are now offering housing finance in Pakistan.

Despite the immense importance of this sector for long-term economic growth, it remains under developed and due importance is not given to the development of affordable and adequate housing facilities.

Further, the influx of population from rural areas has increased manifold over the past decade. As a result, irregular slums in the middle of major cities have grown. “We all are aware that irregular Katchi Abadis and slums lack infrastructure such as health, education and are also a safe haven for criminals,” he added.

Incorporation of the Pakistan Mortgage Refinance Company is one of the major milestones achieved by SBP in this regard, he said. Through the mortgaged refinance company, financial institutions would be able to extend housing loans in much more quantum, as their liquidity issues will be addressed through refinancing facilities availed from this company.

In the long-run, MRC would help in increasing the housing stock in the country, thus taking a step forward towards affordable housing, he said.

Published in The Express Tribune, January 20^th, 2016.

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