SBP launches Mudarabah based Islamic Financing scheme for low cost housing

March 13, 2019 (MLN): In order to facilitate availability of long-term affordable funding to some of the selective low income segments, SPB has launched “Financing Facility for Low Cost Housing for Special Segments”.

In a circular notice issued by The State Bank of Pakistan (SBP) to all banks and Development Finance Institutions (DFIs) on Tuesday, SBP announced to launch a Mudarabah based Islamic Financing Facility scheme for Low Cost housing in which all banks and DFIs will participate and will collectively be termed as Participating Islamic Financial Institutions (PIFIs).

The SBP said that the target amount of this Islamic financing scheme has been set at Rs 2.7 billion, and widows, children of martyrs, special persons, transgender and person in areas severely affected by terrorism can avail this scheme.

Moreover, the tenure of financing has been set at 12 and half years.

“Under this facility, Mudarabah investment of SBP will be available for up to 100 per cent of the amount financed to eligible customers. SBP will make Mudarabah investment in general pool of the PIFI,” said the SBP.

The PIFIs may submit their requests for allocation and assignment of limits under this facility to be evaluated by the SBP as per its internal criteria, said the central bank adding that yearly limits will be allocated to individual PIFIs under the scheme.

Moreover, applications for the sanction of limits  for each fiscal year will be sent by the interested PIFIs to the Director, Infrastructure, Housing & SME Finance Department at the SBP latest by 15 May each year to facilitate sanction of the annual limits at the earliest.

“For the current year, the request for sanction of limits may be submitted within 30 days from the date of issuance of this circular,” said the SBP.

The Mudarabah investment under the scheme will be available for financing sanctioned from the date of issuance of this circular and up to Dec 31, 2023.

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