Banks disburse Rs11.5bln under govt markup subsidy scheme

KARACHI: Loan disbursements by banks under the government’s flagship markup subsidy scheme, commonly known as Mera Pakistan Mera Ghar (MPMG), rose by Rs3.8 billion or 49 percent in August, depicting that lending for affordable housing gained momentum.

Banks disbursed Rs11.5 billion by the end of August, compared with Rs7.71 billion till July 31, 2021, the central bank said on Wednesday.

“Since the launch of the scheme, applications of Rs154 billion under MPMG have been received by banks and banks have approved housing finance of over Rs59 billion, up till August 31, 2021,” the State Bank of Pakistan said in a statement.

The pace of disbursement under MPMG that was initially slow because of a number of factors, including the availability of housing units, has also picked up, it added.

The highest housing finance approval was made by Meezan Bank with Rs9.53 billion, followed by Standard Chartered Bank (Rs9.49 billion) and Habib Bank Limited (Rs5.08 billion).

Bank Alfalah placed top in terms of disbursements. The bank disbursed Rs1.31 billion under the scheme followed by Meezan Bank (Rs1.22 billion) and National Bank of Pakistan (Rs1.15 billion).

On average, to date banks have approved 38 percent of the amount applied and 19 percent of the approved amount has been disbursed. These approvals and disbursement ratios have similarly risen over the past few months as banks have put in place the needed upfront investment in procedures and technology to process applications for low-cost housing.

It would be pertinent to mention here that banks disbursed amounts in different stages of construction or purchase. Thus the pace of disbursement is contingent upon the speed of construction and completion of the purchasing process. Since the announcement of MPMG scheme last year, the SBP has taken various enabling steps such as introducing standardised and simple application form; adopting informal income assessment model; providing relaxations in prudential regulations; establishing helpdesks at all SBP field offices; and, designing a complaint portal supported by a network of focal persons of all banks across all geographical areas.

On the instructions of SBP, banks are accepting MPMG applications from over 8,000 dedicated branches across the country. Further, SBP has also allocated targets to each bank under MPMG.

An e-tracking system has been established within each bank as well as a dedicated joint call centre for facilitating applicants. Naya Pakistan Housing Development Authority (NAPHDA) and Pakistan Banks’ Association (PBA), a representative body of banks, are fully supporting MPMG.

“It is expected that with the ongoing efforts by SBP, government and banks, bank finance for MPMG will gain further momentum in the days to come,” the SBP said.