Pakistan Mortgage Refinance Corporation (PMRC), as Trustee of the Credit Guarantee Trust, on Monday signed a master guarantee agreement with six leading Islamic and conventional banks. to promote affordable housing specially for the low income segments of the society.
The CEOs of Meezan Bank Limited, Habib Bank Limited, Bank Islami Pakistan Limited, Faysal Bank Limited, JS Bank Limited and Soneri Bank Limited signed this important agreement at a ceremony at a local hotel. This is ten-year credit guarantee scheme , which is classified as liquid security by SBP.
Such agreement had already been signed with six financial institutions and Bank of Punjab. The Government has set up Credit Guarantee Trust with the support of State Bank of Pakistan. Moreover, World Bank has funded it.
PMRC’s Chief Executive Officer Muddasir Hussain Khan, on this occasion, said the Credit Guarantee Scheme would pave a way for the banking industry. In addition it will extend housing finance to the low-income group. Hence, a market segment which had remained negligible for long.
He said PMRC had a role of a catalyst in mortgage market development in the country. Also For growth of affordable housing in the country.
He thanked SBP, Federal Ministry of Finance, World Bank and NAPHDA for their leadership and support to this sector. Moreover, for making Prime Minister Imran Khan’s vision of affordable housing a reality.
TASKS ASSIGNED TO PMRC
He said the two main tasks assigned to PMRC were :
(1) to help construction and housing sector especially the low-cost housing
(2) to help the country’s capital market grow fast.
SBP’S DEPUTY GOVERNOR
SBP’s Deputy Governor Jameel Ahmed said signing of this agreement today would help boost the construction and housing industry. More importantly, PM’s Naya Pakistan Housing Scheme for the low-income group people. Besides, it would strengthen the country’s economy .
He said, in line with the Government’s vision, the Credit Guarantee Trust would give risk coverage of up to 40 percent to primary mortgage financiers on first loss basis.
The guarantee would partly cut the credit risk of primary mortgage financiers. It will also give a favorable environment for banks to finance housing for the low-income population.
Keeping in view the dynamics of mortgage market and to help market growth, they have designed the scheme for both conventional and Islamic banks, he said.
He said the risk coverage of mortgage portfolio under Government Markup Subsidy facility provided due comfort to banks. Subsequently, in extending housing finance to the low-income segment for buying or construction of new houses.
He urged the banking industry to benefit from this extra ordinary facilitating environment and extend loans to their maximum potential.
He also emphasized on PMRC management to focus on developing secondary mortgage market through issuance of mortgage-backed securities in the capital market. This would give liquidity to the construction and housing sector . In addition, it will strengthen the capital market.
SBP’s Deputy Governor emphasized that all the stakeholders needed to make concerted efforts to meet the goal of providing housing to the common people.
” We all have to meet the challenge to give a house to every family ( low and middle class) through affordable housing,” he asserted.
ROLE OF STATE BANK IN CONSTRUCTION INDUSTRY
He, however, praised the efforts by financial institutions over the last few months under the umbrella of Steering Committee on Housing and Construction Finance established by State Bank of Pakistan.
Jameel Ahmed highlighted the initiatives taken by SBP to support and help the construction and housing industry; mainly PM’s Naya Pakistan Housing Scheme.
SBP’s Deputy Governor said that being the Central Bank, State Bank of Pakistan owns a major role. It also plays important role in promoting construction and housing industry. However, which was the second largest job provider sector. Many other industries were either directly or indirectly linked to it.
In the light of new developments and demand of the public, SBP along with other banks and financial institutions had revised the credit facilities for this housing sector ; especially for NPHS, time to time.
When his attention was drawn to the complaints that some banks were charging good amount from the applicants under NPHS as the processing charges, he said SBP had taken notice of such complaints.
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