Lahore: The State Bank of Pakistan (SBP) has announced a mechanism to incentivise financing to builders and developers, and penalise mortgage financing — a news source reported on October 8.
Read: Commercial banks ordered to utilise 5% portfolio for housing finance
According to a statement issued by the central bank, the said measures are a follow-up to the previous regulations announced by the bank that set a mandatory target for extending mortgage loans and construction financing to builders and developers.
According to the new mechanism, starting from December 31, banks will be allowed a reduced cash reserve requirement (CRR) with the SBP in the next quarter if the bank achieves the financing targets set for the construction of housing in the previous quarter.
Read: SBP extends loan limit for low-cost housing finance
The amount by which the CRR will be decreased will be dependent on the amount of increase in the housing and construction finance. This incentive will be subject to a ‘ceiling of 1% of total demand and time liabilities based on which the CRR is calculated.’
Additionally, the banks will also need to maintain the daily minimum CRR to its current level of 5%.