Karachi: The State Bank (SBP) has asked Islamic financial institutions to assist the government in its bid to construct five million low-cost residential units at an estimated cost of PKR 17 trillion, a news source reported. Such a collaboration would help the Islamic banking industry address a major challenge of finding Shariah-compliant products for investing excess liquidity.
SBP Governor Tariq Bajwa said the government would require approximately PKR 15 trillion to PKR 17 trillion for the construction of low-cost affordable units under its Naya Pakistan Housing Programme.
He said the amount was huge and the most viable option to achieve the task was to tap into Musharakah, a form of Islamic financing where a joint enterprise or partnership is formed and partners share profit and loss.
The government is also in talks with other financial institutions to provide interest-free loans for the housing programme. The houses will be offered on a 20-year payment plan where the monthly instalments will be as high as PKR 18,564. The applicants will be required to pay 20% of the total amount as a down payment. Those who own a piece of land will be able to get a bank loan of PKR 600,000.