ISLAMABAD: As thousands of people who applied for the subsidized loan for housing under Mera Pakistan Mera Ghar (MPMG) scheme were worried about their approved loan programs after State Bank of Pakistan (SBP) instructed banks to put on hold further disbursements under the program, the ministry of finance on Saturday has assured that issues related to the scheme would be resolved within week.
After the strong resentment showed by the applicants, especially those who had made partial payment (down payment) of the loan to avail the subsidy facility announced by previous government of Pakistan Tehreek-e-Insaf (PTI), Minister of Finance Miftah Ismail has announced that his government is reshaping the scheme.
In a Tweet, he said many people were writing to him that their loans were approved in the Mera Ghar scheme and that they have spent 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,” he said in the Tweet.
Earlier Profit had carried a story regarding suspension of the loan program on June 30, 2022 that SPB has paused loan disbursement under Mera Pakistan Mera Ghar (MPMG) scheme till August 31, 2022, along with suspending fresh disbursements under the Prime
Minister’s Kamyab Jawan Youth Entrepreneurship Scheme till July 15, 2022.
Soon after the story, the beneficiaries and applicants of the housing program started showing their strong resentment and they even had planned to protest outside SBP in Karachi and in front of the Ministry of Finance in Islamabad against the sudden suspension of the program.
The flagship programme was aimed at ensuring availability of adequate housing in Pakistan as well as improving economic activities in the construction sector. The SBP earlier said that the reason for halting 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.”
The circular further clarified that in cases where partial disbursements have already been made till June 30, 2022; financial institutions may release the remaining disbursements under MPMG.
As per sources at Naya Pakistan Housing & Development Authority (NAPHDA) – a dedicated organization established in January 2020 through an Act of Parliament to work on the scheme – the disbursement of subsidy under the house financing scheme has already been stopped by banks as the budget 2022-23 has not allocated any fund for it.
The data released by the SBP shows that as of 31 May 2022, PKR 473 billion had been requested, PKR 212 billion had been approved, and PKR 85 billion had been disbursed under MPMG. The outstanding credit for housing and construction stood at PKR 415 billion for the month ending May 2022.
The budget 2022-23 earmarks only PKR 500 million for NAPHDA, which is hardly enough to cater to the subsidy demand of a mere 16,000 to 17,000 under-construction housing units for one year.
“The disbursement has already been stopped soon after the budget 2022-23,” said an official on condition of anonymity, adding that the issue with this programme was also related to the rising volume of subsidy after a huge jump in interest rates.
As per the programme, the government was supposed to meet the remaining interest rate of what it had announced as subsidy under the low-cost housing scheme. According to the programme, the borrowers were to be charged a financing rate of 3% for the first five years and 5% for the next five years. Under the present interest rate of 13% the government was to bear the remaining interest financing as subsidy. KIBOR + up to 250 bps was decided on for the remaining financing tenor.
Meanwhile, an official at the ministry of finance claimed that “it was realized when banks started demanding funds under the scheme that they have crossed the disbursement limit set for the outgoing fiscal year,” he said.
“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,” he added. According to the official, the issue is now being reviewed at various forums.
