Karachi: The State Bank of Pakistan (SBP) has asked the commercial banks to come up with their own formulas of income estimation to facilitate a large number of people who earn through informal means, news sources reported.
Reportedly, the central bank made the decision as the lending for housing units is still weaker as per government’s estimates.
The purpose of the model is to assess the repayment capacity of applicants with informal income, which can be based on household expenditure including education expenditure and utility bills. This will increase the participation of people in the Government’s Markup Subsidy Scheme (G-MSS), known as Mera Pakistan Mera Ghar.
Furthermore, the banks have highlighted land lease as a key impediment in construction of low-cost homes for the people. The land leasing procedure is complex and resource-intensive, prompting people to build houses on unleashed land in order to save money and time.
According to estimates, as of June 15, 2021, banks have extended home loans of PKR 30 billion against a demand of PKR 90 billion. The central bank has given a month to design a feasible model for estimating income, which can either be based on baseline income estimation model (previously developed by the Pakistan Banks’ Association) or be indigenous.