AIRLINK 191.84 Decreased By ▼ -1.66 (-0.86%)
BOP 9.87 Increased By ▲ 0.23 (2.39%)
CNERGY 7.67 Increased By ▲ 0.14 (1.86%)
FCCL 37.86 Increased By ▲ 0.16 (0.42%)
FFL 15.76 Increased By ▲ 0.16 (1.03%)
FLYNG 25.31 Decreased By ▼ -0.28 (-1.09%)
HUBC 130.17 Increased By ▲ 3.10 (2.44%)
HUMNL 13.59 Increased By ▲ 0.09 (0.67%)
KEL 4.67 Increased By ▲ 0.09 (1.97%)
KOSM 6.21 Increased By ▲ 0.11 (1.8%)
MLCF 44.29 Increased By ▲ 0.33 (0.75%)
OGDC 206.87 Increased By ▲ 3.63 (1.79%)
PACE 6.56 Increased By ▲ 0.16 (2.5%)
PAEL 40.55 Decreased By ▼ -0.43 (-1.05%)
PIAHCLA 17.59 Increased By ▲ 0.10 (0.57%)
PIBTL 8.07 Increased By ▲ 0.41 (5.35%)
POWER 9.24 Increased By ▲ 0.16 (1.76%)
PPL 178.56 Increased By ▲ 4.31 (2.47%)
PRL 39.08 Increased By ▲ 1.01 (2.65%)
PTC 24.14 Increased By ▲ 0.07 (0.29%)
SEARL 107.85 Increased By ▲ 0.61 (0.57%)
SILK 0.97 No Change ▼ 0.00 (0%)
SSGC 39.11 Increased By ▲ 2.71 (7.45%)
SYM 19.12 Increased By ▲ 0.08 (0.42%)
TELE 8.60 Increased By ▲ 0.36 (4.37%)
TPLP 12.37 Increased By ▲ 0.59 (5.01%)
TRG 66.01 Increased By ▲ 1.13 (1.74%)
WAVESAPP 12.78 Increased By ▲ 1.15 (9.89%)
WTL 1.70 Increased By ▲ 0.02 (1.19%)
YOUW 3.95 Increased By ▲ 0.10 (2.6%)
BR100 11,930 Increased By 162.4 (1.38%)
BR30 35,660 Increased By 695.9 (1.99%)
KSE100 113,206 Increased By 1719 (1.54%)
KSE30 35,565 Increased By 630.8 (1.81%)

KARACHI: The State Bank of Pakistan (SBP) Thursday announced revision in Prudential Regulations (PRs) for consumer financing to moderate import and demand growth. As per revised regulations, the maximum tenure of the auto finance facility is reduced from seven (7) years to five (5) years. In addition, new as well as used imported vehicles will not be eligible for auto financing from banks/DFIs.

According to the SBP, this targeted step will help to moderate demand growth in the economy, leading to slower import growth and thus supporting the balance-of-payments. The changes in the PRs effectively prohibit financing for imported vehicles, and tighten regulatory requirements for financing of domestically manufactured/ assembled vehicles of more than 1000 cc engine capacity and other Consumer Finance facilities like personal loans and credit cards.

As per amendments, maximum tenure of auto finance has been reduced from seven (7) to five (5) years and the maximum tenure of personal financing, except the financing extended for educational purpose as prescribed in the regulation, is decreased from five (5) years to four (4) years.

SBP mandates banks to share five-day schedule of import payments

Maximum debt-burden ratio, allowed to a borrower, has been decreased from 50 to 40 percent and overall auto financing limits availed by one person from all banks/DFIs, in aggregate, will not exceed Rs3,000,000, at any point in time. However, the financing limit of borrowers whose approved limit already exceeds Rs3,000,000 may be amortized as per existing terms and the same shall not be further increased. Minimum down payment for auto financing has been increased from 15 percent to 30 percent.

With the objective to protect lower to middle income category purchases, these new regulations are not applicable to locally manufactured or assembled vehicles of up to 1,000 cc engine capacity. They are also not applicable to locally manufactured electric vehicles to promote use of clean energy. The financing of these two categories of vehicles will continue to be governed by previous set of regulations. Further, in order to encourage Roshan Digital Accounts and facilitate overseas Pakistanis who have opened these accounts, regulatory instructions for Roshan Apni Car product of the banks or DFIs have also not been changed.

According to SBP, these amendments in Prudential Regulations for Consumer Financing will be applicable, with immediate effect, on new financing facilities.

Copyright Business Recorder, 2021

Comments

Comments are closed.