Circulars/Notifications - Banking Policy & Regulations Department  
 BPRD Circular No. 04 of 2009
February 11, 2009

The Presidents/Chief Executives
All Banks/DFIs

Dear Sir/Madam,

AMENDMENTS IN PRUDENTIAL REGULATIONS
FOR CONSUMER FINANCING

  Please refer to the Prudential Regulations for Consumer Financing as amended from time to time.

Based on the review of prudential regulations and feedback from banks/DFIs, the following amendments in the regulations for consumer financing have been made with immediate effect:

A. MINIMUM CONDITIONS FOR CONSUMER FINANCING

OPERATIONS

1. At the time of granting facility under various modes of consumer financing, banks / DFIs shall obtain a written declaration on the prescribed format attached as Annexure–CF1 from the borrower divulging details of various facilities already obtained from other banks/financial institutions.

2. Before allowing any facility, the banks / DFIs shall obtain a consumer credit report from the Credit Information Bureau of State Bank of Pakistan or from any consumer Credit Information Bureau of which they are a member.

REGULATION R-3

TOTAL FINANCING FACILITIES TO BE COMMENSURATE WITH THE INCOME

While determining the credit worthiness and repayment capacity of the prospective borrower the banks / DFIs shall ensure that the total monthly amortization payments of consumer loans should not exceed 50% of the net disposable income of the prospective borrower.

B. REGULATIONS FOR CREDIT CARDS

REGULATION R-7

MAXIMUM CARD LIMIT

Bank/DFI may issue credit card to one person with a maximum unsecured limit not exceeding Rs 1,000,000/, subject to mandatory credit check & prescribed debt burden and condition that total unsecured credit card limits availed by that person from all banks/DFIs does not exceed Rs. 1,000,000

As a result of above upward revision in clean limit for credit card, regulation concerning prime customers mentioned in R-7 stands withdrawn.

C. REGULATIONS FOR HOUSING FINANCE

REGULATION R-17

MAXIMUM TENURE OF LOAN

Banks/DFIs may extend mortgage loans for housing upto any tenure defined in the bank’s/DFI’s duly approved credit policy and keeping in view the maturities profile of their assets & liabilities.

D. REGULATIONS FOR PERSONAL LOANS INCLUDING LOANS FOR THE PURCHASE OF CONSUMER DURABLES

REGULATION R-23

CLEAN LIMIT PER PERSON FOR PERSONAL LOANS

Banks/DFIs may assign personal loan limits to one person with a maximum unsecured limit not exceeding Rs 1,000,000/, subject to mandatory credit check & prescribed debt burden and condition that total unsecured personal loans limits availed by that person from all banks/DFIs does not exceed Rs. 1,000,000.

As a result of above upward revision in clean limit for personal loans, regulation concerning prime customers mentioned in R-23 stands withdrawn.

Other instructions on the subject will remain the same.

Please acknowledge receipt.

Encl: As above

Yours sincerely,

Sd/-

(SYED IRFAN ALI)
Director

       
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