Govt, private sector sign shareholders’ deal for PMRC

KARACHI: Government and private sector on Saturday signed shareholders’ agreement for Pakistan Mortgage Refinance Company (PMRC) established to provide low-cost housing units across the country where home financing accounts for 0.5 percent of GDP.

Government holds 49 percent, while private sector banks have majority 51 percent stake in the company under the agreement.

Shareholders comprise ministry of finance, Habib Bank Limited, United Bank Limited, National Bank of Pakistan, Askari Commercial Bank Limited, Allied Bank Limited, Bank Al Falah, Bank Al Habib and House Building Finance Company.

Jameel Ahmed, deputy governor of State Bank of Pakistan (SBP) said Pakistan faces a shortage of 10 million housing units, which need to be addressed on a priority basis. “The central bank’s vision 2020 clearly prioritises housing, agriculture and SMEs (small and medium enterprises) for development,” Ahmed said in a statement. SBP deputy governor said supply and demand side issues are getting complex, which gives rise to the irregular settlements in the country. “In Karachi alone there are 562 kachi abadies (irregular settlements),” he added. “PMRC can play vital role in the promotion of local housing finance market.”

Rehmat Ali Hasnie, chairman board of directors of PMRC said the gross outstanding housing finance portfolio increased to around Rs80 billion in December 2017 from Rs51 billion in December 2013. “PMRC will provide innovative, viable and market-based financial products for the development of housing finance market in Pakistan,” he added.

NK Rupan, managing director and chief executive officer of PMRC said the housing demand is growing at the rate of 400,000 to 700,000 houses a year mainly in the middle and low income segments. Rupan said primary mortgage lenders (PMLs) are reluctant to grant housing loans, particularly to middle and low income groups because they do not have long-term funds at fixed rate. “PMLs will be encouraged to originate more mortgage loans if they can source medium to long term funds to reduce their maturity mismatches and liquidity risk.”

Chief executive PMRC said the company’s role is to develop the primary mortgage market by providing medium to long-term funding at fixed rates to the lenders, “providing the lenders with risk management tools to alleviate the lenders’ maturity mismatch and liquidity risks”.

“PMRC will also develop the local corporate bond market, particularly the fixed rate bond market,” he added.

Namous Zaheer, representative of the World Bank said an objective of the bank’s $140 million of credit line to PMRC is to enable women to increase their ownership of house as presently only two percent women own houses in Pakistan.

Saeed Ahmed, president of National Bank of Pakistan said mortgage financing declined to only 0.5 percent of GDP from 1.5 percent previously. “Only low cost housing schemes can play role to reduce the demand for houses,” Ahmed added. “Shortage of houses cannot be fulfilled through conventional means.”