PM’s Rs3.2 trillion housing finance scheme raises concerns over compliance with 2028 riba deadline: report

The government’s Rs3.2 trillion housing finance programme has drawn scrutiny over its alignment with the constitutional deadline to eliminate interest-based financing (riba) by January 1, 2028, The News reported. 

The structure and timeline of the scheme raise questions about compliance with the requirement to phase out interest-based lending within the stipulated timeframe.

The programme outlines a five-year financing plan, with Rs321 billion allocated in the first year to support construction of 50,000 housing units and a total outlay of Rs3.2 trillion. Under this framework, new loans would continue to be issued beyond 2028.

Each loan carries a repayment period of up to 20 years, meaning financing extended close to or after the 2028 deadline would remain subject to interest-based repayments for an extended period.

The scheme also includes a fixed markup of 5 per cent for the first 10 years, after which market-based rates will apply, indicating continued reliance on interest-based lending mechanisms.

Sources said the issue of alignment with the constitutional deadline may not have been fully considered during the design of the programme.