The federal cabinet has declared Pakistan Mortgage Refinance Company (PMRC) Limited as Development Financial Institution (DFI), which is ready to launch its operations in housing sector shortly, official sources told Business Recorder.
Pakistan Mortgage Refinance Company Limited was set up as a joint initiative of Government of Pakistan (GoP) and commercial banks/DFIs with the technical support of the International Finance Corporation (IFC) and the World Bank as a mortgage liquidity facility. PMRC was a financial institution that provided medium and long-term funding to primary mortgage lenders by raising funds from the capital debt market at cheaper rates than the primary mortgage lenders would have been able to access if acting on their own.
According to sources, PMRC was successfully incorporated with SECP in May 2015. Federal government paid 20 percent share of Rs 1.2 billion in equity of PMRC in June 2015. In October 2016, eight banks and DFI (HBFCL) signed share subscription agreement and paid their initial contribution of capital amounting to Rs 110 million in December 2016. In November 2016, a full time MD/CEO and other key executives were hired. In May 2017, the Board had approved key policies, operational manuals and mode of operations of PMRC.
As per Memorandum of Association (MoA) the main objective of the company was to promote, develop and improve housing finance market of Pakistan with a view to increase accessibility of affordable housing to the citizens and to provide refinance facilities to the banks and to financial institutions against their existing conventional and Islamic housing finance portfolios on such terms and conditions as the company deemed fit and in accordance with the applicable laws of Pakistan. Under article 3 of the Articles of Association of PMRC "before the commencement of business, the company shall be notified as DFI by the federal government under section 3-A of Banking Companies Ordinance (BCO), 1962."
"After granting the status of DFI, the objectives of PRC shall remain same as specified in Memorandum of Association of PMRC."
On October 18, 2017, the Cabinet was informed that PMRC intends to launch its operations in 2017 and therefore has requested the federal government/ Finance Ministry to specify "Pakistan Mortgage Refinance Company Limited" as DFI under section 3-A of the Banking Companies Ordinance, 1962. Moreover, State Bank of Pakistan (SBP) had conveyed its objection to notify PMRC as DFI which was endorsed by the Finance Ministry.
The summary was submitted to the cabinet in accordance with Supreme Court of Pakistan''s judgment PDC 2016 SC 808 on specifying Pakistan Mortgage Refinance Company Limited as DFI under section 3-A of the Banking Companies Ordinance 1962.
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