The Financing Facility for Low Cost Housing for Special Segments, outlined under Annexure I of IH&SMEFD Circular No. 5 of 2019, aims to provide accessible housing finance to specific marginalized groups in Pakistan. This initiative is designed to support individuals such as widows, children of martyrs, persons with disabilities, transgender individuals, and residents of specified districts in Khyber Pakhtunkhwa who wish to construct or purchase affordable housing units.
Scope of the Housing Scheme
The scheme extends housing finance exclusively to the following categories of individuals:
- Widows
- Children of martyrs (Shaheed) of law enforcement agencies, armed forces, and civilians martyred in terrorist attacks
- Special persons holding CNIC with disability logo/symbol
- Transgender individuals
- Pakistan residents interested in building homes (including purchasing plots) within designated districts of Khyber Pakhtunkhwa (Mohmand, Bajaur, Orakzai, Kurram, Khyber, North Waziristan, and South Waziristan
Eligibility Criteria for Housing Scheme
To qualify for financing under this scheme, individuals must meet the following criteria:
- Non-ownership: The borrower must not own any residential housing unit, flat, or apartment.
- First-time financing: The borrower must not have previously availed housing finance from any bank or DFI.
- Purpose: Financing is available solely for the construction (including plot purchase) of new housing units.
- Maximum value: The total value of the housing unit financed under this scheme, including the plot value, must not exceed Rs. 3 million.
- Restrictions: Sale or renting out of the financed housing unit is prohibited until full adjustment of outstanding finance or five years after the first disbursement date, whichever is earlier.
Participating Financial Institutions (PFIs)
All banks and DFIs are eligible to participate in providing financing under this scheme, ensuring broad accessibility across the financial sector.
Bank/DFI-wise Refinance Limits
- Annual allocation: Yearly limits are allocated to individual PFIs under the scheme.
- Application process: Interested banks/DFIs must submit requests for sanctioning limits for each fiscal year by 15th May, with flexibility for the current year’s submission within 30 days of the circular’s issuance.
- Utilization review: SBP periodically reviews the utilization of limits by PFIs and may reallocate or cancel unused limits for redistribution, emphasizing effective utilization over mere allocation.
Tenor and Size of Loans
- Maximum financing: PFIs can provide financing up to 100% of the disbursed amount to eligible borrowers.
- Individual borrower limit: Financing to a single borrower cannot exceed Rs. 2.7 million.
- Plot financing: Financing for plot purchase, as part of housing construction, is limited to Rs. 1 million.
- Loan tenor: Financing is available for a maximum period of 12.5 years, inclusive of a grace period of up to six months.
Disbursement of Loans
- Refinance process: PFIs disburse loans on a case-by-case basis and subsequently approach SBP BSC offices for refinancing.
- Documentation: Refinance requests must include prescribed documents such as Refinance Application Form, Agreement Form, DP Note, Undertaking from the customer, and Financing Agreement, along with an Internal Audit Certificate ensuring compliance with scheme terms.
Repayment of Loans and SBP’s Refinance
- Repayment schedule: Loans are repayable in monthly installments post-grace period, with provisions for early repayment without penalty to borrowers.
- Recovery: SBP recovers refinance and associated charges from PFIs based on original repayment schedules, independent of borrower defaults.
Rates of Service Charges
- Fixed rates: SBP offers refinance to PFIs at fixed service charges throughout the loan tenure, contingent on the loan’s adherence to housing finance PRs.
- End-user rates: PFIs are authorized to charge a maximum spread of 4% over the SBP refinance rate, setting end-user rates at 5%.
General Terms & Conditions
- Compliance: PFIs must ensure strict compliance with scheme guidelines, internal policies, and SBP directives, including Prudential Regulations.
- Inspections: SBP’s Banking Inspection Department conducts periodic inspections to verify scheme compliance by PFIs.
- Amendments: The scheme remains active until December 31, 2023, subject to amendments as per SBP directives.
Faqs About Financing Facility for Low Cost Housing Scheme for Special Segments
What is the Financing Facility for Low Cost Housing scheme for Special Segments?
The Financing Facility aims to provide accessible housing finance to specific marginalized groups in Pakistan, including widows, children of martyrs, persons with disabilities, transgender individuals, and residents of specified districts in Khyber Pakhtunkhwa seeking affordable housing solutions.
Who is eligible to apply for housing finance under this scheme?
Eligible applicants include individuals who do not own any residential property, have not previously availed housing finance, and fall into one of the specified categories such as widows, children of martyrs, special persons with disability CNIC, transgender individuals, and residents of designated districts in Khyber Pakhtunkhwa.
What is the purpose of financing under this Housing scheme?
Financing is exclusively for constructing new housing units or purchasing plots for construction in specified districts of Khyber Pakhtunkhwa.
What is the maximum value of housing units that can be financed under this scheme?
The total value of the housing unit, including the plot, must not exceed Rs. 3 million.
Can the financed housing unit be sold or rented out immediately?
No, the financed housing unit cannot be sold or rented out until full repayment of the finance or five years from the first disbursement date, whichever comes earlier.
Which financial institutions are participating in providing financing under this scheme?
All banks and Development Finance Institutions (DFIs) registered with SBP are eligible to participate, ensuring widespread accessibility across Pakistan.
What are the loan tenor and repayment terms?
Loans can extend up to 12.5 years, including a grace period of up to six months. Repayment is structured in monthly installments post-grace period, with provisions for early repayment without penalty.
What documentation is required for applying for housing finance under this scheme?
Applicants must submit necessary documents including a Refinance Application Form, Agreement Form, DP Note, Undertaking from the customer, and Financing Agreement, along with an Internal Audit Certificate ensuring compliance with scheme terms.
How are service charges and interest rates determined under this scheme?
SBP provides refinance to Participating Financial Institutions (PFIs) at fixed service charges, allowing PFIs to charge a maximum spread of 4% over the SBP refinance rate to end-users, resulting in a maximum end-user rate of 5%.
Where can I find more information about the Financing Facility for Low Cost Housing for Special Segments?
Detailed guidelines and application procedures are outlined in IH&SMEFD Circular No. 5 of 2019 and subsequent updates issued by the State Bank of Pakistan. Interested stakeholders are advised to refer to these circulars for comprehensive information on eligibility, procedures, and participating institutions.
Conclusion
The Financing Facility for Low Cost Housing for Special Segments addresses critical housing needs among marginalized groups in Pakistan, promoting inclusivity and socio-economic development. By facilitating access to affordable housing finance, this initiative supports community welfare, enhances living standards, and fosters financial inclusion across targeted demographics.
For detailed information and application procedures, interested stakeholders are advised to refer to IH&SMEFD Circular No. 5 of 2019 and subsequent updates issued by the State Bank of Pakistan.