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Karachi, July 24, 2007
— IFC, a member of the World Bank Group, has signed an agreement with the State Bank of Pakistan to launch a housing finance training program in the country. It will help improve the housing finance market by enhancing the knowledge and skills of practitioners. The program will be implemented by IFC Advisory Services for the Middle East and North Africa - PEP-MENA
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The training, which is expected to start next month, is part of IFC’s efforts to develop the housing finance market for middle- to low-income people in Pakistan. It will cover all aspects of the sector—from product development, loan marketing, distribution, and origination to loan underwriting, servicing, and risk management. The training is geared toward staff of banks and nonbank financial institutions that are providing housing finance or intend to in the future.
The housing sector is a priority for the State Bank of Pakistan. It recently established a department dedicated to infrastructure and housing finance. The bank has also removed the 10 percent cap, of total advances, on mortgage lending for commercial banks.
Although the outstanding mortgage debt in the country has grown nearly threefold in the last three years to about 70 billion rupees ($1.16 billion equivalent), it is only about 1 percent of Pakistan’s gross domestic product, which is one of the lowest penetration rates in the Middle East and North Africa.
“Thanks to IFC and the international trainers, we will be able to train lenders, provide them with best practices in the field of housing finance, and ensure that the training material is tailored to the Pakistani market,” said Azhar Kureshi, Executive Director of the State Bank of Pakistan.
Syed Farhan Fasihuddin, IFC Manager for the program, added, “The lack of mortgage origination and underwriting expertise in Pakistan and the scarcity of credible information and legal infrastructure are preventing housing finance from expanding and benefiting the lower-income market segments. This training is expected to help build the capacity of mortgage lending institutions to provide more housing finance loans and operate more efficiently.”
As part of its advisory services in the housing finance sector, IFC has been working with the House Building Finance Corporation, the largest and oldest mortgage lender in Pakistan, to develop a sustainable business plan for its operations. IFC has also been working with the State Bank of Pakistan’s housing advisory group to promote expansion of the housing market by providing recommendations to simplify the business environment, which includes creating a mortgage refinance company that will provide long-term funding at fixed interest rates.
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY06, IFC committed $8.3 billion, including syndications, to 284 investments in 66 developing countries. For more information, please visit
www.ifc.org
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About IFC PEP-MENA
IFC PEP-MENA is a multidonor facility for advisory services that supports private sector development across the Middle East and North Africa. It focuses on improving the business-enabling environment, strengthening financial markets, supporting SME development, and promoting privatization and public-private partnerships. From its inception through FY06, IFC PEP-MENA has committed more than $20 million in advisory projects. Its activities are funded jointly by IFC and the following donors: Canada, France, the Islamic Development Bank, Japan, Kuwait, the Netherlands, the United Kingdom, and the United States.
About State Bank of Pakistan
The State Bank of Pakistan is the central bank of Pakistan. It performs both traditional and developmental bank functions to achieve macroeconomic goals. Its primary traditional functions include issuing notes, regulating and supervising the financial system, last-resort lending, serving the government, and conducting monetary policy. Secondary functions include managing public debt and foreign exchange, advising the government on policy matters, and maintaining close relationships with international financial institutions. The State Bank’s nontraditional or promotional functions include developing a financial framework, institutionalizing savings and investment, and providing training facilities to bankers and credit to priority sectors. The bank has also been playing an active part in Islamic finance.
For more information, visit
www.sbp.gov.pk
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