Karachi, December 17, 2007
—IFC, a member of the World Bank Group, and its partners, the State Bank of Pakistan and the Canada Mortgage Housing Corporation, have provided housing finance training to 120 Pakistani bankers. The goal is to improve local expertise in the housing finance sector, helping build the capacity of 30 financial institutions and address the increasing demand for affordable mortgage loans for low- and middle-income people.
The training program was developed in response to a recent needs-assessment study. It comprised two sessions. The first was tailored to senior management and future master trainers. The second targeted mid-level employees, who were trained on core lending issues related to residential mortgage lending.
Dr. Shamshad Akhtar, Governor of the State Bank of Pakistan, who chaired the closing session on the bank’s role in promoting housing finance, said, ”Thanks to IFC and the international trainers, we are able to provide lenders with training, best practices in housing finance, and training material that is tailored to the Pakistani market.”
Syed Farhan Fasihuddin, IFC Program Manager for housing finance in the Middle East and North Africa, said, “Although outstanding mortgage loans in Pakistan grew from 24 billion rupees [$400 million] in December 2003 to over 78 billion rupees [$1.3 billion] in June 2007, they only represented about 1 percent of GDP, compared to 3 percent in India, 15 percent in Chile, and 65 percent in the United States.”
Annual disbursement of new housing loans grew from 8.4 billion rupees in 2004 to 25.3 billion rupees in 2007. However, the increase in the number of new loans is modest, from 11,177 to 13,045, reflecting a rise in average loan size due to an increase in home prices.
As part of its advisory services for housing finance, 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 create a business enabling environment. A key recommendation is to establish a mortgage refinance company to 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 private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through loan participations and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit www.ifc.org.
About State Bank of Pakistan
The State Bank of Pakistan is the country’s central bank. 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
.
