Wednesday June 29, 2022

SBP takes notice of delayed loan approvals for housing finance

By Our Correspondent
May 01, 2021

KARACHI: Taking cognizance of complaints about delayed loan process, the central bank on Friday asked banks to speed up approvals under the government markup subsidy scheme to promote housing finance.

“SBP has been receiving a number of complaints especially regarding delayed processing, long turnaround time and no mechanism to track the financing application after submission,” the State Bank of Pakistan (SBP) said in a circular, referring to the government markup subsidy for housing finance.

Banks/development finance institution are advised to put in place within 30 days from the date of the circular an online e-tracking mechanism and a phone-based help line to provide, on query of applicant, status and expected time required for decision on application, said the SBP Devise a system to monitor 30 days turnaround time for decision on applications received, it added.

Record and convey reasons of rejection of housing finance application to the applicant in simple and clear form, it said.

“In order to increase prospects of applicants to avail housing finance under G-MSS, banks/DFIs are advised to guide the applicants regarding the options of 100 percent clubbing of income of up to four co-applicants and enhancing their credit worthiness through third party guarantee as allowed vide the previous circular,” it said. “Equip the branch officials, through trainings and alignment of systems and procedures, to perform initial scrutiny and inform the customer about missing requirements/documents at the time of submission of application,” it added.

The SBP also asked banks to conduct capacity building of call center officials to adequately address queries of customers. “It has also been observed that complaints lodged on State Bank complaint portal remain pending with banks for unduly long times. The banks/ DFIs are advised to adopt appropriate measures to resolve complaints in a timely manner. Moreover, policy for designation of focal person for State Bank complaint portal must be reviewed and it should be ensured that at least one focal person is present in each region to handle the complaints,” it said. Banks/DFIs are advised to review and rationalize their processing fee for financing considering their actual costs

In October last, the government introduced the markup subsidy scheme, now commonly known as Mera Pakistan Mera Ghar housing finance scheme. This scheme enables banks to provide financing for the construction and purchase of houses at very low markup rates, targeting low to middle income segments of the population.

Banks are required to increase their housing and construction finance portfolios to at least 5 percent of their private sector advances by end December 2021.

The banks’ housing and construction finance portfolio has increased from Rs148 billion by the end of June 2020 to Rs202 billion in March 2021. This represents a growth of Rs54 billion or 36 percent in three quarters of FY21 compared to a stagnant position in earlier quarters.