State bank of Pakistan fixes the mandatory targets of housing loan disbursement for banks. This is done so with a view to promoting housing and construction of buildings (Residential and Non-Residential) in the country.
As per the notification of SBP, “Accordingly, each bank shall ensure that the financing for housing and construction of buildings (Residential and Non-Residential) shall be at least 5 percent of their domestic private sector credit by December 2021”.
SBP has advised the banks to gear up the infrastructure and capacity to make sure the compliance of meeting the prescribed targets.
Accordingly, each bank is required to develop a concrete action plan with detailed measures and their timelines to achieve its housing and construction finance targets.
This action plan should contain the breakdown of overall targets into quarterly targets, development of suitable products, launching of media campaigns, and development of internal technology, capacity building of staff, and other actions needed to ensure the 5 percent target is met.
Banks have been directed by the SBP to submit their concrete action plans to this department within 15 working days.
Banks will also be required to report data of approvals and disbursements against these targets on a monthly basis starting from September 2020.
SBP will be keeping a close monitoring of progress on the prescribed targets.
Non-compliance in meeting the targets shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.