KARACHI: In an effort to slow import growth and curb the skyrocketing trade and current deficits, the State Bank of Pakistan (SBP) revised prudential regulations (PRS) for consumer finance, reducing the limit and duration of loans for imported vehicles.
“The changes to the PRs effectively prohibit the financing of imported vehicles and tighten regulatory requirements for financing domestically manufactured / assembled vehicles with cylinder capacity greater than 1000cc and other consumer finance facilities such as personal loans and credit cards, ”the central bank said in a statement. A declaration.
“This targeted step will help moderate demand growth in the economy, leading to slower import growth and thus supporting the balance of payments.”
Here are the changes made to the PRS by the SBP:
- The maximum duration of car financing has been reduced from seven to five years
- The maximum duration of the personal loan has been reduced from five to four years
- The maximum debt ratio allowed for a borrower has been reduced from 50 to 40
- The overall auto finance limits used by one person from all banks / DFIs, in total, will not exceed Rs 3,000,000, at any time
- The minimum deposit for car financing has been increased from 15% to 30%.
In order to protect purchases from lower to middle income categories, SBP said these new regulations do not apply to locally manufactured or assembled vehicles with a displacement of up to 1,000 cc.
They are also not applicable to locally made electric vehicles to promote clean energy use, he added.
“The financing of these two categories of vehicles will continue to be governed by the previous regulations,” said SBP.