The Chief Executives,
All Banks/DFIs
Dear
Sirs/Madam,
PRUDENTIAL REGULATIONS FOR CONSUMER FINANCE
Please
refer to the Prudential Regulations on Consumer Financing
issued by State Bank of Pakistan.
2.
The following amendment/ clarification may be noted;
a)
Housing Finance: The banks/DFIs will not allow Housing Finance
purely for the purchase of land/plots; rather, such financing
would be extended for the purchase of land/plot and construction
on it. In this connection, the sanctioned loan limit, assessed
on the basis of repayment capacity of the borrower, value
of land/plot and cost of construction on it etc., should
be disbursed in tranches, i.e. up to a maximum of 50% of
the loan limit can be disbursed for the purchase of land/plot,
and the remaining amount be disbursed for construction there-upon.
Further, the lending bank/DFI will take a realistic Construction
Schedule from the borrower before allowing disbursement
of the initial loan limit for the purchase of land.
b)
Maximum Clean Lending Limit under Credit Card and Personal
Loan: In order to provide flexibility in the regulatory
framework with respect to clean lending limit against Credit
Cards and Personal Loans, it has been decided to allow assigning
a clean limit higher than Rs.500,000 to the prime customers
of the banks/DFIs. Accordingly, R-7 and R-24 of the Prudential
Regulations for Consumer Financing are replaced as under:
Maximum
Card Limit (Regulation R-7)
i) Maximum unsecured limit under credit card to a borrower
(supplementary cards shall be considered part of the principal
borrower) shall generally not exceed Rs 500,000/.
ii)
However, the banks/DFIs may assign a clean limit beyond
Rs 500,000 but not in excess of Rs 2 million to their prime
customers who have extraordinary strong repayment capacity,
moderate debt burden and a clean track record. But the aggregate
outstanding in this respect should not exceed 10% of the
total outstanding credit card portfolio at any point in
time. However, while availing benefit of this provision,
banks/DFIs would place on record a well defined criteria
for terms "Prime Customers" and "Moderate
Debt Burden" approved by their Board of Directors/
Chief Executive.
iii)
The banks / DFIs may also allow financing under the credit
card scheme in excess of Rs 500,000/- (up to Rs 2 million)
to other customers as well, provided the excess amount is
appropriately secured according to the definition as given
at serial No. 23 in Part A of the Prudential Regulations.
iv)
The loan secured against liquid securities shall, however,
be exempted from this limit.
v)
The loans against the securities issued by Central Directorate
of National Saving (CDNS) shall be subject to such limits
as are prescribed by CDNS / Federal Government / State Bank
of Pakistan from time to time.
vi)
For Charge Cards, pre-set spending limits generated by the
standardized systems, as is the global practice, shall be
allowed.
Per
Party Limit (Regulation R-24)
i) The clean limit per person for personal loans will generally
not exceed Rs 500,000/-.
ii)
However, the banks/DFIs may assign a clean limit beyond
Rs 500,000 but not in excess of Rs 2 million to their prime
customers who have extraordinary strong repayment capacity,
moderate debt burden and a clean track record. But aggregate
outstanding in this respect should not exceed 10% of the
total outstanding personal loans at any point in time. However,
while availing benefit of this provision, banks/DFIs would
place on record well defined criteria for terms "Prime
Customers" and "Moderate Debt Burden" approved
by their Board of Directors/ Chief Executive.
iii)
The banks / DFIs may also allow financing under Personal
Loans in excess of Rs 500,000 (up to Rs.1,000,000) to other
customers as well, provided the loan is appropriately secured
according to the definition given at serial No. 23 of Part
A of the Prudential Regulations.
iv)
The loan secured against liquid securities shall, however,
be exempted from this limit.
v)
The loans against the securities issued by Central Directorate
of National Saving (CDNS) shall be subject to such limits
as are prescribed by CDNS / Federal Government / State Bank
of Pakistan from time to time.
4.
Other instructions on the subject will, however, remain
unchanged.
5.
Please acknowledge receipt