The State Bank of Pakistan (SBP) on Thursday instructed banks to implement a revised government-approved Interest margin subsidy for the low-cost housing system.

Based on the feedback received from various stakeholders, the Government of Pakistan decided to revise the characteristics of the subsidy scheme in line with the market dynamics. These changes aim to significantly improve the system’s coverage of individuals and families who do not currently own a home.

The maximum loan amount ranges from 2 to 10 million rupees for a minimum term of 5 years and a maximum term of 20 years, depending on the client’s selection.

In accordance with the bank’s lending policy and the prudential regulations on housing finance, the housing financed will be underwritten in favor of the bank’s financing. SBP Financial will grant the right to debit the GOP account on a quarterly basis to disburse grants to banks. Banks will be paid through submitting consolidated quarterly reports on subsidies according to the format specified by the State Bank.

Themended features are immediately effective. Consequently, Circular No. 11 of 2020 IH & SMEFD has been canceled. However, the instructions in IH and SMEFD Circular 01 2021 will continue to apply.

SBP instructed banks to ensure effective implementation of the revised G-MSS by distributing necessary guidelines to branches / regions, building field staff capacity, coordinating housing finance products and active marketing campaigns, etc.

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