The State Bank of Pakistan (SBP) incentive package for construction and housing sector would help achieve financing targets of influential builders for high-end housing.
According to the observation, made by Tabadlab, an Islamabad-based private research firm, “It is likely that the new guidelines to promote the financing of housing units in under-construction projects will end up encouraging the construction of high-end apartments by renowned builders.”
This would help the SBP inch closer toward its targets of construction financing but would fall short of generating more affordable housing units in the country, ostensibly the very policy goal of the push for easier construction financing. “It will not also help in substantially contributing to the reduction of the 10 million housing units’ gap in Pakistan.”
Tabadlab remarked over the SBP current incentive package for the construction and housing sector, in its research paper. The research organization is dissatisfied over the role of the Central Bank regarding the currently given incentive is of the view that this role should be given to Real Estate Regulatory Authority (RERA) for which the parliament has cleared an enabling law.
The research firm is of the strong opinion that the establishment of autonomous RERAs in all provinces is of vital importance for the promotion of common man welfare and to bring transparency to the real estate sector.
Tabadlab comes with the observation that due to lack of structural reforms to strengthen the economic condition of the country, the Central Bank of the country has been promoting different sectors of the economy through concessionary financing for export or for renewable energy or for Small and Medium Enterprises (SMEs) or for industrial programs.
In the research paper of Tabadleb, it is clear that the effort by the State Bank of Pakistan to promote the construction sector while helping the government in this regard is not objectionable in spirit but instead of providing broad guidelines to commercial banks and allowing the bank to make their own policies to achieve these objectives, Central Bank is formulating very specific guidelines, entering in the domain of RERA.