The State Bank of Pakistan on Tuesday made some changes in the Prudential Regulations for Housing Finance and directed all banks and DFIs to ensure the circulation of these regulations among their offices.
With the aim to further facilitate the promotion of Housing Finance, Prudential Regulations (PRs) for Housing Finance have been revised in consultation with the stakeholders.
Regulation Housing Finance (HF-1(4): Development of Financing Documents: In addition to existing requirements, banks/DFIs are further advised to obtain the thumb impression(s) along with the borrower’s signature(s) on financing and recourse documents. The banks/DFIs are also encouraged to provide terms and conditions in Urdu language for better understanding of the customers and read out the same to the customers before finalizing the documentation process.
Regulation HF-1(08): Information Disclosure: For the purpose of calculating the annualized percentage rate, the number of days in a year has been changed to 365 days from 360 days. Accordingly, the changed formula is as follows below:
Regulation HF-1(11): Facilities to Related Persons: For the purpose of bringing clarity in the said regulation, an amendment has been made that in case of a resignation/separation/termination, staff housing finance should be monitored and serviced as commercial housing finance.
Regulation HF-2: Types of Housing Finance: The said PR has been amended to the extent that the borrower can avail an additional housing finance after the completion of 2, instead of 3 years from the last date of disbursement. Moreover, the time to avail Balance Transfer Facility (BTF) in housing finance has also been reduced to 18 months from a previous of 3 years.
Regulation HF-3: Debt Burden Ratio: in case of clubbing of income of the co-borrower, the consent of the co-borrower should be obtained in writing.
Regulation HF-7: Property Assessment: The restriction to determine the frequency of property revaluation has been lifted. Furthermore, the housing finance of up to Rs 10 million should be subject to assessment of the property by at least one evaluator, listed on PBA approved panel and the housing finance of more than Rs 10 million should be subject to assessment of the property by at least two evaluators listed on the PBA approved panel.
However, the properties valuing up to Rs 3 million should not be subject to assessment by an evaluator. Banks/DFIs can use their own internal resources to assess the properties having a market value of up to Rs 3 million.
These changes are applicable with immediate effect. All other instructions on the subject shall remain unchanged.
