Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular Letter No. 05 of 2022
February 25, 2022

The Presidents/ Chief Executives
All Banks/DFIs

Dear Sir(s)/ Madam(s),

Guidelines for Financing of Housing Units in Under-Construction Projects

         Please refer to IH&SMEFD Circular No. 10 dated September 02, 2021, on the subject.

2. In order to further facilitate buyers of housing units in under construction projects, requirement of builder/developer to avail construction financing is being relaxed. Accordingly, purchasers of housing units in under construction projects may avail housing finance against their housing units in projects where builder/developer has not availed construction financing.

3. In such cases, the builder/developer will have to create mortgage charge over project’s land in favor of bank/DFI through an agreement. The charge will only be vacated after completion of the project and transfer of housing units to the purchasers. Moreover, the builder/developer will comply with all other provisions of subject Guidelines.

4. Any bank/DFI can provide housing finance to a purchaser of a housing unit in such under construction projects. However, if the purchaser wants to avail financing from a bank/DFI other than the mortgagee bank/DFI, then it will have to obtain NOC from the mortgagee bank/DFI in this regard. Moreover, financing bank/DFI of such purchasers will also be required to enter into bilateral arrangement with the mortgagee bank/DFI to secure its risk.

5. With regard to the requirement of informed consent mentioned in Clause 7 of Guidelines, it is clarified that the builder/developer will be responsible to arrange written informed consent from the customers who intend to purchase housing units from their own sources without availing mortgage finance. The letters of written consent of such purchasers will be submitted to the bank/DFI in original by the builder/developer.

6. All other instructions on the subject shall remain unchanged.


Yours sincerely,

(Dr Mian Farooq Haq)


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