Please refer to IH&SMEFD Circular No. 12 of November 20, 2020 whereby banks/DFIs have been given exemptions from Regulation HF-3: Debt Burden Ratio of Prudential Regulations for Housing Finance to facilitate them to extend financing to applicants of low cost housing finance who have informal sources of income.

2.    In order to provide benefit of above relaxations to the applicants of low cost housing finance with informal income, all banks/DFIs are advised to develop and deploy income estimation models/proxy models for assessment of income and repayment capacity. The Pakistan Banks’ Association (PBA) has already circulated a standard income proxy model developed by selected banks as a guidance to the banks/DFIs. The banks/DFIs are free to deploy the same model or customize this model or build their own income estimation model.

3.    The banks/DFIs are required to confirm within 4 weeks of the date of issuance of this circular that they have made their informal income proxy models operational.