To help commercial banks meet their mandatory targets for housing and construction financing, the State Bank of Pakistan has proposed new regulatory measures. Even though this year has witnessed rising profits, banks have not performed well on the disbursement of loans for housing and construction.
In September last year, the SBP introduced mandatory targets that required lenders to extend mortgages and financing to developers and builders. In addition, the targets required banks to increase their housing and construction loan portfolio to at least 5% of their total private credit. The SBP has also notified banks to include their wholesale lending to microfinance providers and housing finance companies for onward financing under the Naya Pakistan Low-Cost Housing (NPLCH) towards their mandatory targets.
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