PHA woos banks to finance low-cost houses in KP

PESHAWAR: Commercial banks have agreed in principle to finance construction of low-cost small houses in public sector housing schemes in Khyber Pakhtunkhwa and accept the plots as collateral for such financing.

The banks expressed their willingness to be part of the “Khpal Kor” scheme under which five marla house will cost Rs2 lakh including the cost of land, two bedrooms, drawing kitchen and boundary wall. The readiness was expressed at a meeting of the regional chiefs of Bank of Khyber, National Bank and Askari Bank with Special Assistant to chief minister Dr Amjad Ali Khan.

The meeting, besides others, was also attended by Secretary Housing Department Dr. Jamal Yousaf, director general (DG) Provincial Housing Authority (PHA) Ijaz Afzal and director Town Planning Saif Usmani.

The minutes of the meeting indicated that the banks would accept the plot as collateral to be under charge and would finance the construction as well as purchase of the plot. The finance will be extended on soft terms for 20 years repayment.

The meeting was informed that the scheme would generate an investment of about Rs680 billion if only 30 percent of the government servants availed the facility.

Similarly, there is a housing deficiency of 2.1 million houses and catering for only 25 percent of the demand will generate an upfront investment of Rs1000 billion. It was also told that this investment would create huge economic activity and employment and mobilize 46 up and down stream industries.

The concept paper of the scheme shows that the model of bank financing against mortgage and collateral of the plots has been designed to enable the common citizens to have their own houses at affordable cost.

The model, it said, targets needy households by providing them semi-urban basic services. The plots allotted in any of the housing schemes under PHA and Housing Department will be accepted as collateral.

The model it said proved successful due to fast process of developing the plots and the approach encourages, rather induces, people to undertake immediate construction of houses. The district local governments, nazims and deputy commissioners have been requested to identify land, preferably non-agricultural, from 300 to 20,000 kanals and intimate to the PHA for planning, designing and development under public-private partnership (PPP) mode.

Presently, the commercial banks and Housing Building Finance Corporation (HBFC) offer exclusive products for home financing, in various formats and terms and conditions. They extend home financing to a person having a monthly income of Rs. 40,000.

House financing is availed individually and in groups in Punjab and Sindh whereas such lending in Khyber Pakhtunkhwa is negligible, owing to the undeclared policy of the banks bracketing the militancy-ravaged province as “red zone” for lending and some other factors.

To implement that scheme on the lines of Punjab and Sindh the PHA and Housing Department was planning to enter into agreement with the commercials banks to extend volume discount on soft-terms and conditions. The banks have been requested to establish district-wise desks exclusively for the purpose.

The general public will also avail the facility and the banks will extend the home financing to all individuals meeting the monthly income threshold.In case of government servants and pensioners, the home financing will be extended on the basis of grade, age, take home salary and service.