‘Low-cost housing scheme is a game-changer’

KARACHI: Syed Mujtaba Abbas, MD-Head, Consumer, Private and Business Banking, Standard Chartered Bank (Pakistan), in an interview says the government’s low-cost housing scheme has been a game-changer in the mortgage industry.

Q: What is the level of financing approved by your bank under Mera Pakistan Mera Ghar Scheme to date? How many loans have your bank disbursed at this point?

A: Standard Chartered Bank (Pakistan) Limited is deeply committed to the socio-economic prosperity of the people of Pakistan and strives to maximise the contribution to the SBP initiatives on promoting housing finance. These initiatives are of immense importance in bridging the housing gap due to the growing population, primarily for the low-income group and catering to the needs of non-residents through Roshan Apna Ghar Scheme. Standard Chartered Bank, being the only foreign bank operating in Pakistan, having a global presence and outreach is the preferred choice for non-resident Pakistanis for their banking and financing needs.

Till date, we have approved financing of over Rs10 billion under Mera Pakistan Mera Ghar Scheme. We are one of the first banks to achieve the landmark of Rs1 billion disbursement under this scheme. Currently, our total disbursements are to the tune of Rs1.6 billion.

Q: Do you think a subsidized scheme for housing finance and Roshan Apna Ghar for overseas Pakistanis will help boost banks’ lending portfolio in times to come?

A: Owning a house is a dream of every person and only few can afford it without getting financing support from banks.

Roshan Apna Ghar is a first-of-its-kind initiative for around 10 million non-resident Pakistanis and is termed as a game-changer for the country’s economy. Most overseas Pakistanis aim to buy or build a home in Pakistan for themselves and their families. With Roshan Apna Ghar, this dream has become easier to realise. The appetite for affordable mortgages is rising and banks will also benefit to diversify their lending portfolio in these segments.

Q: What financing options are available under Roshan Apna Ghar scheme?

A: Customers maintaining balances in the Roshan Digital Account scheme can always use these funds to avail Roshan Apna Ghar facility.

Furthermore, mortgage financing under this scheme is available against property as per the prescribed regulations of the State Bank of Pakistan.

Q: The SBP has recently issued guidelines to promote housing finance in under-construction projects. What’s your comment on it?

A: It’s an excellent value addition and very much in the right direction to facilitate those individuals who have struggled to own a house in the past. It will to some extent, also address the issue of a shortage of housing units. It’s a known fact that there is a scarcity of dwellings in Pakistan, particularly in the metro cities, and promoting financing in under-construction projects will support this cause. It is also expected to give a boost to the construction activities and its allied industries.

We are hopeful that the builders will develop, construct and handover the units well within the stipulated timelines, whilst ensuring high-quality construction standards.

Q: What are the challenges related to mortgages in Pakistan?

A: Pakistan’s housing finance to GDP ratio is less than 1 percent, which is low as compared to the South Asian regional average of over 3 percent. With these new initiatives introduced by the SBP, we are hopeful that this ratio will improve considerably and act as a catalyst to GDP growth and the development of allied industries. Key challenges related to mortgages include less effective enforcement of foreclosure laws, non-standard property documentation, unclear and non-digital property titles, and unauthorised constructions. Q: Would the decision of the central bank to increase interest rates affect housing loans in Pakistan? What do tighter monetary conditions mean for mortgages?

A: While higher interest rates will always affect the decision of mortgage financing, however

government’s mark-up subsidy scheme (GMSS) will remain immune to any interest rate movement as the government is providing subsidy to the mortgage clients for the first 10 years.