Mera Pakistan Mera Ghar: Applicants in doubt as SBP looks for ‘line of action’ with govt

The State Bank of Pakistan (SBP) said that “a line of action will be finalised in consultation with the government” for applicants who have deposited token amounts with sellers in pursuit of homes under the now-suspended Mera Pakistan Mera Ghar (MPMG) Scheme.

“Data of those customers is currently being collected from the banks,” said the SBP in an emailed response to Business Recorder.

“The scheme has been temporarily suspended for two months as the government is in process of revising its features to make it more conducive and practical in the wake of prevailing macro financial environment.

“With regards to approved cases, customers who have already received partial amounts of their approved financing will continue to receive their remaining financing amounts as per their agreements with their financing banks.”

Govt suspends Mera Pakistan Mera Ghar Scheme for two months

However, the bigger point of concern is the thousands of those customers who have seen their applications get approved after months of documentation but have yet to see any amount disbursed to them. Several of these applicants are customers who have deposited token amounts with sellers after having pursued the scheme for months.

The issue arose after the government abruptly suspended the popular 'Mera Pakistan Mera Ghar' (MPMG) Scheme, advising banks, Development Financial Institutions (DFIs), and microfinance banks (MFBs) to put further disbursements on hold from July 1, 2022 till August 31, 2022.

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Many applicants now fear losing their deposits after having paid millions in documentation and partial payments.

“We followed all the directions set by our bank,” one affected customer told Business Recorder on condition of anonymity. “We paid the valuation fee and after the bank approved the property, only then did we pay 10% of its value to the seller to confirm the deal. Our sale agreement is now in jeopardy.”

Another customer, who says he spent Rs600,000 on documentation and partial payment, must now vacate his current premises by the end of this month after having ended his rental agreement on hope of moving to the new house.

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“I have no clarity on what’s going to happen.”

Under the scheme, banks had disbursed close to Rs100 billion by the end of June, according to SBP data. The central bank said disbursements have been made to around 28,000 beneficiaries. This means the average amount of loan to each beneficiary stands at Rs3.57 million.

However, the amount approved by banks stands at nearly Rs236 billion, pointing towards the number of people who have yet to see any amount.

An official privy to the matter said that there were nearly 1,000 applicants with his bank alone who were awaiting disbursement.

There are 21 participating banks, but the number of applicants awaiting any disbursement after having made the deposit may vary significantly from bank to bank.

However, estimates made by Business Recorder suggest more than 30,000 applicants have yet to see the full amount disbursed to them.

“The State Bank was vigorously pushing us to promote the scheme and then the government abruptly suspended it,” said a banker privy to the matter. “Now people are stranded and regularly visiting banks.”

The housing scheme, which was originally financed by the World Bank through the Pakistan Mortgage Refinance Company (PMRC), started in October 2020 with approvals starting in December the same year.

The government then liberalised features of the MPMG scheme in light of feedback of stakeholders to benefit the larger strata in March 2021, according to information available on the SBP website.

Available in both conventional and Islamic mode, this scheme was aimed at enabling banks to provide financing for the construction and purchase of houses at low rates for low- to middle-income segments of the population.

Pakistan’s housing mortgage-to-GDP ratio is just 0.3%, the lowest in the region, where the average for South Asian countries is 3.4%.

The SBP was the executing partner with the government and Naya Pakistan Housing and Development Authority (NAPHDA).

However, with support coming from the World Bank, many have questioned if its suspension was needed.

When asked, the SBP said that the World Bank is providing financing to PMRC to top up its existing risk sharing facility for the banks.

“Since banks had never ventured in low-cost housing, this infrastructure support has been very useful. As mentioned earlier, the scheme has been temporarily suspended in the wake of recent macrofinancial environment. Government is reconsidering the features of scheme to make it more targeted and conducive,” the SBP repeated in its response.