Auto-finance

The country’s financial landscape has undergone a significant shift. The discount rate now stands at 12 per cent and banks are flush with excess liquidity – so much so that we are taxing unutilised funds. Simultaneously, the government, through forums like the Special Investment Facilitation Council (SIFC), is actively encouraging economic activity and private sector lending. Given Pakistan’s traditionally cautious banking sector, consumer financing presents a relatively low-risk, high-impact opportunity to deploy surplus liquidity. Vehicle financing, in particular, is backed by tangible collateral and offers a secure, structured repayment model – especially appealing in a market where consumer credit is underpenetrated.

It is, therefore, imperative for the SBP to revisit and recalibrate its regulations. Raising the leasing cap to at least Rs10 million would reflect the current market reality, where even mid-range vehicles now exceed Rs5 million. Lease tenures should be extended to five-to-six years and the leasing of three-to-four-year-old imported/used vehicles should be permitted, considering their reliability and market demand. These adjustments would not only support consumer access to vehicles but also channel banks’ idle funds into a productive, low-risk segment of the economy.

Syed Waqar Hasnain

Islamabad