ISLAMABAD: The federal government has decided in principle to empower commercial banks to take possession of mortgaged houses after a cumulative notice period of 90 days in cases of loan default, as part of major reforms aimed at boosting Pakistan’s underdeveloped housing finance sector.
The proposed amendments to “The Financial Institutions (Recovery of Finances) Ordinance, 2001” were discussed during a meeting of the National Assembly Standing Committee on Finance and Revenue chaired by Syed Naveed Qamar in Islamabad.
Under the proposed foreclosure law, banks and financial institutions will be allowed to issue three separate notices of 30 days each to borrowers who fail to pay mortgage dues. If the borrower remains in default after the final notice, the bank may proceed with the sale of the mortgaged property, provided all legal notices have been properly served.
The Standing Committee expressed serious concerns over provisions that could grant excessive powers to banks in the foreclosure process. Committee members stressed that while stronger recovery laws are necessary to encourage mortgage financing and protect lending institutions, borrowers must also receive legal safeguards and protection from unfair actions.
After detailed discussions, the committee deferred the bill to its next meeting and directed the Ministry of Housing and Works to circulate a revised draft among members for further review before final approval.
Former finance minister Syed Naveed Qamar said affordable housing finance should genuinely benefit low-income families through transparent and accountable mechanisms. He added that effective foreclosure and recovery laws are essential for strengthening Pakistan’s mortgage finance sector and increasing banks’ confidence in long-term housing lending.
Officials from the ministries of finance, housing and law also briefed the committee on the Prime Minister Apna Ghar Programme (PM-AGP), which aims to provide subsidised housing loans to low and middle-income families.
Housing Secretary Captain (retd) Mehmood Ahmad informed the committee that the PM Apna Ghar Programme was approved in August 2025 and revised in March 2026. The scheme offers housing finance of up to Rs10 million at a fixed markup rate of 5 percent, repayable over 20 years with a 90:10 financing ratio for first-time homeowners.
According to official figures, Pakistan received 25,304 applications under the scheme by April 30, 2026. Out of these, 8,990 applications worth Rs37.154 billion were approved, while Rs5.071 billion had been disbursed to 1,845 beneficiaries.
The committee was informed that Pakistan’s housing finance sector remains severely underdeveloped, with mortgage financing contributing only 0.3 percent to GDP and 0.56 percent to total private sector credit.
The government has set a target to finance 500,000 housing units over the next four years, requiring an estimated Rs3.2 trillion in financing. Finance Secretary Imdadullah Bosal acknowledged that the government currently lacks the fiscal space for such funding but said resources would be arranged through financial adjustments and subsidy reviews.
The committee also raised concerns about limited access to housing finance in rural and underserved areas and questioned whether banks have the institutional capacity to achieve the ambitious target.
Law Secretary officials told the panel that the revised amendments include provisions allowing banks to reschedule, restructure or settle mortgage liabilities before selling a property. The reforms are intended to improve transparency, ensure timely recovery and encourage sustainable growth in Pakistan’s housing finance sector.
