Comparing mortgage financing in neighboring countries, he elaborated that it is 10 percent whereas 20 percent in other developing countries like Malaysia, Indonesia and more than 100 percent in developed countries. However, he regretted that In Pakistan, the mortgage financing to GDP ratio is less than 0.5 percent. He said the construction sector is connected with 40 allied industries. Hence, housing sector is linked with economic growth. Mr. Hasnain believed that MPMG also fulfills another important function of Financial Inclusion in the country. He pointed out that SBP has been working to improve the percentage of mortgage financing in the country and two basic hurdles which this sector faced earlier were removed now. He said the absence of Foreclosure laws remained a big hurdle in Pakistan previously but as this issue has been resolved the pace of mortgage financing will further grow in the country. The second important factor is the availability of sufficient liquidity for the success of housing sector. Banks did not have long term deposits for ten to twenty years. Apart from these, there were some non-structural issues which have also been taken care of. 

Explaining the factors that led to the suspension of the Scheme, Mr. Hasnain negated from the onset, the impression that the decision was taken due to the changed political scenario. He averred change in some economic fundamentals led to the decision of temporarily halting the Scheme. Going into further details, he shared that when MPMG was launched, Karachi Inter Bank Offered Rate (KIBOR) was 8 percent and the margin for banks was 4 percent as banks received funds at KIBOR + 4 percent, banks received at 12 percent initially. The end user received financing at 5 percent and the subsidy paid by government was 7 percent. In the last few months fundamentals began to change; policy rate began to change, exchange rate deteriorated and the KIBOR increased to 16 percent which compelled the government to revise the Scheme. He revealed that at present the subsidy has gone up to 15 percent for the government to pay which was 7 percent initially; at the same time government is resuming the IMF program and had taken fiscal consolidation measures, and it became difficult for government to bear this huge subsidy. He said the Government of Pakistan (GoP) temporarily paused the Scheme on June 30, 2022 to reconsider its features and make it more targeted so as to ensure that the benefits of the same reach at grassroots level to low and middle income households who cannot afford to purchase or construct a housing unit without availability of subsidized financing.  

Talking about the disbursement made so far, Mr. Hasnain noted till January 2021, there was zero mortgage financing in Pakistan (excluding mortgages given in established and expensive housing societies) and upon completion of 1.5 years of this Scheme, on 30 June, 2022 the disbursement made under this Scheme reached Rs.100 billion while applications worth Rs.500 billion were already received and approvals had amounted to Rs.236 billion. He said now banks have realized that this is a successful business model and they are treating it as a viable business model.  

He felt contended that banks have also financed individuals with no formal sources of income under this Scheme. ‘These individuals do not even possess pay slips and for this reason SBP stepped in,’ he said adding, ‘we developed score cards for people with informal incomes. All an individual needs to do is to insert his electricity bills, mobile top ups and other bills in the scorecard and by doing this, banks using a defined model calculated the score for such individuals. Based on that score, banks calculated the repaying capacity and decided the amount of loan that should be given to him/her,’ he observed. 

Removing the misconception regarding the fate of those individuals who have given bayana (token money), he underlined that SBP has already notified that fresh disbursements should be stopped from 30 June, and those applicants whose partial disbursements remain, would be given the remaining disbursements; these individuals need not wait for 31^st August as both SBP and GoP have decided that such individuals should be given disbursements under normal process. For this, SBP has issued a circular to all banks as well.  

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When the extreme resentment was shown by the applicants, particularly those who had made down payment of the loan to avail of the subsidy facility announced by the last government of Pakistan Tehreek-e-Insaf (PTI), Finance Minister Miftah Ismail announced that the government is reshaping the scheme.

Talking to Twitter, Miftah said many people were complaining to him that their loans were approved in the Mera Ghar scheme and that they have paid money based on that approval. “I want to assure you that we are reshaping this scheme and no one will lose their money. We will resolve the issues within the next week.”

Last month SBP paused loan disbursement under Mera Pakistan Mera Ghar (MPMG) scheme till August 31, 2022, as well as delaying fresh disbursements under the Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme till July 15, 2022.

Soon after the incident, the applicants and beneficiaries of the housing program started showing their anger and they even decided to protest outside the central bank in Karachi and in front of the Ministry of Finance in Islamabad against the unexpected postponement of the program.

However, the SBP said that the reason for suspending both schemes was the same: “Government of Pakistan is considering review/revise features of the subject scheme in light of recent developments in the macroeconomic scenario.”

Moreover, the SBP data shows that as of 31 May 2022, PKR 473 billion had been demanded, PKR 212 billion had been accepted, and PKR 85 billion had been distributed under MPMG. The outstanding credit for housing and construction remained at PKR 415 billion for May 2022.

 “The disbursement has already been stopped soon after the budget 2022-23,” an SBP official said.

 “It was realized when banks started demanding funds under the scheme that they have crossed the disbursement limit set for the outgoing fiscal year,” an official at the ministry of finance claimed, adding, “Apart from the huge claims of banks, there was a complete lack of coordination among the concerned departments including SBP, banks, and ministry of finance, which ultimately resulted in the mess.”

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