The State Bank of Pakistan (SBP) has allowed banks and development finance institutions (DFIs) to extend loans for the cost of ancillary items of vehicles. With this approval now banks and DFIs can extend financing for CNG kits, vehicle tracking devices ie Global Positioning System, commonly known as "tracker", and other ancillary items while sanctioning auto loans for the ex-factory tax paid price fixed by the car manufacturers.
However, the banks or DFIs are not permitted to finance the premium charged by the dealers or investors over and above the ex-factory tax paid price of vehicles, fixed by the manufacturers. According to BPRD Circular No 06 issued on Wednesday, the Regulation R-11 of the Prudential Regulations for Consumer Financing has been substituted with the following:
"While allowing auto loans, the banks and DFIs shall ensure that the minimum down payment does not fall below 10 percent of the value of the vehicle. Further, the banks/DFIs may extend auto loans for the ex-factory tax paid price fixed by the manufacturers and the cost of ancillary item(s) (like CNG kits, vehicle tracking device ie Global Positioning System commonly known as "Tracker" etc) desired by the borrower to be fitted in the vehicle. However, the banks and DFIs shall not finance the premium charged by the dealers or investors over and above the ex-factory tax paid price of cars/vehicles, fixed by the manufacturers." The amendments in Regulation R-11 have been made in the light of the feedback received from banks and DFIs.
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