Karachi: According to news reports, the State Bank of Pakistan (SBP) increased the housing finance ceiling for commercial banks by increasing the exposure limit from 15% to 25% on Wednesday (December 01). The aim has been updated for the second time this year to increase Development Financial Institutions’ (DFI) ability to lend loans to residential and non-residential development projects.
According to sources, the central bank has demanded a detailed timeline from DFIs in order to accomplish the housing finance targets, in addition to the goals set for each bank. The number of housing units distributed and the amount of housing credit disbursed are among these objectives.
The SBP also allowed banks to invest in Sukuk bonds, management firms for Real Estate Investment Trusts (REITs), and REIT-issued shares. Banks could also raise funds by purchasing bonds issued by the Pakistan Mortgage Refinance Company (PMRC).
As a result, the total funds generated will be compared to the established 25% threshold. The SBP has created a number of policies and regulated banks to improve housing sector lending in recent years. The SBP issued an order in July forcing banks to establish funding mechanisms and satisfy statutory requirements of 5% or face penalties under the Banking Companies Ordinance, 1962.