SBP, Pakistan’s Incentives for Low Cost & Affordable Housing Finance

SBP’s announcement of new regulatory incentives to promote low-cost and affordable housing finance dated November 20, 2020, State Bank of Pakistan is constantly providing enabling regulatory environment to promote housing and construction finance. This is an important sector that has significant economic linkages with other sectors in the economy and the current level of credit provision in this sector is at a very low level of less than 1 percent of GDP which is much lower than in other similar countries and in the region. To support the provision of finance to this sector and especially facilitate affordable housing, SBP has now announced five regulatory relaxations to incentivize banks for financing low-cost and affordable housing. Firstly, the definition of low-cost housing finance used in the current regulations for banks has been aligned with the definition used under Government Markup Subsidy Facility for Housing Finance eligible under Tiers I & II of housing finance.