World Bank, NBP discuss strategies to boost housing finance

ISLAMABAD: A World Bank delegation called on the National Bank of Pakistan (NBP) president and CEO Saeed Ahmad on Wednesday and discussed the housing finance market, its issues, challenges and possible solutions.

The World Bank team was led by senior financial sector economist Korotoumou Ouattara, senior housing finance specialist Adrey Milyutin, financial sector specialist Nouma Dione, and housing finance adviser Olivier Hassler.

The delegation also included representatives of Pakistan Mortgage Refinance Company (PMRC) including MD and CEO N Kokularupan, chief operating officer Dr Muhammad Saleem, and head of treasury Syed Ali Adnan.

The World Bank team apprised that in coordination with key stake holders they were proposing to assist Pakistan for development of this market and were preparing a housing finance project.

This project will provide support to expand conventional mortgage lending; support to increase lower-income housing finance; and capacity building and technical assistance for housing policy. In addition, PRMC was also talking to banks for providing support for on-lending.

NBP president and CEO Saeed Ahmad gave an overview of the challenges the Pakistani housing finance market was facing, including recovery and foreclosure laws, infrastructure, cost of funding and affordability.

“Affordable housing segment offers an opportunity to financial sector to expand its portfolio on a secured and profitable basis. This will help further improve other industries, generate employment and contribute to growth on an ongoing basis,” he said.

He also said the initiative, along with public/private partnership, would tackle the housing problem for the low income segment of the society and would help eliminate slums. “With my association with Pakistan Mortgage Refinance Company as a chairman in the past, I would suggest PMRC to take a lead to create schemes which could benefit all stakeholders, and provide business opportunities for Pakistan Mortgage Refinance Company,” he added.

He also emphasised on the important role of the World Bank in developing social and affordable housing for low income segments through innovative techniques and mentioned that the housing finance study earlier conducted had pointed to a shortage of seven million housing units in the country a few years back which may now have exceeded 10 million.

 NBP CEO also pointed out that specialist housing finance institution does not seem to be playing its due role and should be strengthened with sufficient capital, management and technical resources. He said that this sector required special focus to overcome these challenges where Islamic banks and Islamic financing products could prove to be pivotal in its development. 

Korotoumou Ouattara from World Bank explained the importance of the changes that the housing finance project aims at triggering, starting with fixed rate lending and increased lending to households particularly low-income segment. She also stressed on the importance of this sector and its overall contribution towards the county’s economic development.

Pakistan Mortgage Refinance Company MD and CEO N Kokularupan explained the role of the company in establishing and promoting fixed rate mortgage market, reducing maturity mismatch risk for banks and in the development of local capital market through regular issuance of conventional and Islamic debt instruments.

He explained that their current discussions with banks, including NBP included use of these instruments as well as working with developers to overcome challenges of housing titles/ ownership.

He mentioned certain other challenges being faced by PMRC in starting its operations. Pakistan Mortgage Refinance Company along with World Bank is planning to sign a MOU in the near future with NBP along with other commercial banks to implement the above mentioned strategies in Pakistan’s financial sector.