By Abdul Wajid Khan ISLAMABAD, May 31 (INP-WealthPK): The Ministry of Finance said that due to the implementation of regulatory measures, housing finance increased by Rs42 billion to Rs160 billion during the first half of the current financial year FY21-22. During the first half of FY20-21, housing finance increased by Rs6 billion i.e. from Rs100 billion to Rs106 billion. According to an official document of the Ministry of Finance, a copy of which is available with WealthPK, the allocation of mandatory targets for housing and construction finance to banks, and the introduction of the government’s markup subsidy scheme, also known as Mera Pakistan Mera Ghar (MPMG) scheme, have been the major driving factors behind this unprecedented growth. The report said a number of regulatory and policy measures of the State Bank of Pakistan (SBP) have also given necessary impetus of growth in housing finance in line with these key initiatives. The SBP has also taken several other initiatives to promote housing and construction finance in the country. Under these initiatives, the central bank issued the initial version of government's markup subsidy scheme for housing finance in October 2020, while its revised version, incorporating feedback of stakeholders, especially the banks, was issued in March 2021. Under the MPMG scheme, banks/House Building Finance Company Limited (HBFC)/microfinance banks (MFBs) provide housing finance at subsidised rates to individuals/households who currently do not own a house, enabling them to purchase or construct their own houses. Accordingly, as of December31, 2021, banks had approved more than Rs117 billion and disbursed Rs38 billion under the MPMG. As of April 25, 2022, banks had disbursed more than Rs70 billion under the MPMG. In order to promote the construction of buildings (residential and non-residential) in the country as envisaged by the government of Pakistan, the SBP has assigned mandatory targets to banks to extend mortgage loans and financing for developers and builders. Banks were required to increase their housing and construction finance to at least 5% of their private sector advances. Accordingly, banking credit to housing and construction sector increased by Rs163 billion, from Rs192 billion to Rs355 billion, during 2021, while as of March 30, 2022, the banks’ housing and construction finance portfolio had been recorded at Rs404 billion. The SBP’s initiatives to promote the MPMG and housing finance also include relaxation from regulatory requirement of debt burden ratio and verifiable income in case of banks using income estimation/repayment surrogate for extension of low-cost housing finance to informal income applicants. It contains regulatory relaxation allowing banks/development finance institutions (DFIs) to extend low-cost housing finance against personal guarantee of a third party for a maximum period of one year. It comprises implementation of standardized income proxy model developed by banks to facilitate housing finance to customers with informal sources of income. It includes issuance of e-tracking numbers by banks to customers allowing them to track the status of their financing applications under the MPMG; engagement with provincial governments for reduction of stamp duties on mortgage registration; facilitation to Naya Pakistan Housing and Development Authority (NAPHDA) recommended builders/developers by working as conduit between NAPHDA developers/builders and banks to promote developer finance/project finance. It also contains relaxation to bank collaterals provided by customers in the form of liquid securities or other properties to meet prescribed 15% equity contribution for availing housing finance; designation of at least 50% of branches of banks to receive and process applications of financing from customers under the MPMG; mystery shopping surveys of bank branches to assess their readiness and provide necessary insight/guidance to banks to improve their customer handling/facilitation at branches. An official of NAPHDA told WealthPK that the increase in banks credit to the housing sector is a good sign and it will help the low-income segment of the society to build houses. He added that the increase in housing finance will boost economy by generating massive economic activities in the country. “Under the scheme, the government is providing subsidy on markups and deserving people can have subsidised house loan facility. The government has targeted the low-income segment of the society, and cases are approved after strict verification by relevant authorities to ensure transparency, and only deserving applicants are being given priority,” said the official. He said that although the department faces certain issues in implementation of projects, including land acquisition, which is a difficult process, work on different ongoing projects under NAPHDA is smoothly underway. Under the scheme, ongoing projects will be completed in due time. According to the latest figures provided by NAPHDA, currently, around 59,000 housing units are under construction across the country.