KARACHI: Amidst federal government’s special incentive for the construction sector, the State Bank of Pakistan (SBP) on Wednesday decided to set a mandatory target for banks to extend mortgage loans and financing for developers and builders.

According to the SBP release issued today, banks will be required to increase their housing and construction of building loan portfolios to at least five percent of their private sector credit by the end of December 2021.

It said that a massive shortfall of housing units has accumulated over the years in the country and bank financing for mortgages and housing construction is less than one percent of GDP which is one of the lowest in the region.

“The banks have been directed to improve their capacity to achieve the mandatory targets,” said the central bank and further directed the commercial banks to submit a detailed plan of action with the SBP in next 15 days, containing quarterly targets, development of products, media campaigns, development of technology infrastructure, and capacity building of staff, amongst other areas.

Banks have also been directed to report data of approvals and disbursements against the targets on a monthly basis starting from September 2020.—INP