Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular No. 12 of 2020
November 20, 2020

The Presidents/Chief Executives
All Banks/DFIs


Dear Sir(s)/Madam(s),

Revised Prudential Regulations for Housing Finance

  1. Please refer to IH&SMEFD Circular No. 4 dated March 11, 2019 on the captioned subject containing the definition of low cost housing finance and exemption/relaxation in Prudential Regulations for low cost housing finance.

  2. Based on stakeholders’ feedback, it has been decided to revise the definition of low cost housing finance. Accordingly, to qualify under low-cost housing finance, the borrower has to fulfill the following criteria:

    a. Maximum value of the housing unit/apartment up to PKR 3.5 million
    b. Covered area of the housing unit / apartment up to 850 square feet
    c. Loan size up to PKR 3.15 million

  3. Further, it has been decided to exempt bank/DFIs financing for low cost housing from Housing Finance Prudential Regulation HF-3: Debt Burden Ratio, provided the bank is relying on repayment surrogates for extension of financing.In case of use of informal income estimation models, banks will be exempt from requirement of verifiable income only.

  4. Banks/DFIs shall have proper risk management and internal control systems in place and shall frame internal credit policy in the area of low cost housing finance.

  5. These changes are applicable with immediate effect.

  6. Please acknowledge the receipt.

Yours sincerely,


(Dr. Mian Farooq Haq)


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