ISLAMABAD: The Economic Coordination of Cabinet has approved a Rs13.2 billion Technical Supplementary Grant in favor of Pakistan Mortgage Refinance Company Limited (PMRCL), to provide medium and long-term funding to primary mortgage lenders by raising funds from the capital debt market at cheaper rates.
Minister of Finance and Revenue Ishaq Dar on Tuesday chaired the ECC meeting and approved Rs13.2 billion TSG in favor of Pakistan Mortgage Refinance Company Limited (PMRCL). The grant is equivalent to $ 50 Million and is to be obtained from the World Bank as the 1st Tranche of a Credit Line of $ 85 Million.
Pakistan Mortgage Refinance Company Limited (PMRC) has been set up as a joint initiative of the government and commercial banks and development finance institutions (DFIs) with the support of the International Finance Corporation (IFC) and the World Bank (WB). The purpose of this body is to provide medium and long-term funding to primary mortgage lenders by raising funds from the capital debt market at cheaper rates.
The government holds 28.86% shares of PMRC, while the rest of the 71.14 % shareholding are held by banking sector investors which include –NBP, HBL, UBL, IFC, Askari Bank, Bank Alfalah, ABL. Bank Al Habib Ltd., HBFCL and Summit Bank. The State Bank has issued a “commencement of business” certificate to PMRC from I2-06-2018
The World Bank provided credit line of US$ I40 million to government during 2018 to pass on the same to PMRC at a concessional rate of 3%. To expand the provision of risk cover to Els against financing in housing sector, the World Bank on 10-03-2022 approved an additional credit line of $85 million to the government for a Housing Finance Project. This will be passed on to Credit Guarantee Trust Fund (CGTF) solely owned by the government as a loan, and PMRC will act as a trustee.
In this regard, the Economic Coordination Committee (ECC) of the Cabinet, on 29-11-2022, approved a summary regarding constitution of a new scheme titled Credit Guarantee Trust Scheme for low income housing namely Mera Pakistan Mera Ghar (MPMG) Scheme through a Second Supplemental Trust Deed with the amount of $ 85 million to be obtained from the World Bank. The cabinet ratified the same, dated 08-12-2022.
The second supplementary trust deed between government and PMRC has been signed on 15-12-2022 which has been registered by the Directorate of Labour and Industries, Islamabad on 20-12-2022.
The disbursement process for the first tranche of US$ 50 million has been initiated. In order to release the said funds to PMRC, an equal amount of rupee cover would be required and the Finance Division has allocated an amount of Rs 1 billion Federal Miscellaneous Investments & Other Loans and Advances for the current fiscal year for the Pak rupee equivalent of the said fund.
Accordingly, a letter to AGPR for opening an Assignment Account in National Bank of Pakistan, Karachi in the name of PMRC – Trustee Credit Guarantee Trust Scheme for low income housing – MPMG to operate the Trust Fund has been issued. 8. In order to release the funds amounting to US$ 50 million to be received from the World Bank, an equal amount in Rs 14.2 billion at the rate of Rs 284 per US$ as per the prevailing exchange is required.
The Finance Division has allocated an amount of Rs. 1 billion under federal miscellaneous investments & other loans and advances for fiscal year 2022-23 for the Pak rupee equivalent of the said funds, therefore, funds of Rs 13.2 billion will be arranged through Technical Supplementary Grant.
