The Chief Executive Officer of Pakistan Credit Guarantee, Dr. Muhammad Saleem has stated that profit alone cannot be used as a metric to measure the performance of Mortgage Refinance Companies in the housing sector.
He made this assertion on Monday during a virtual interview with the Housing Development Advocacy Network (HDAN) that focused on issues relating to mortgage guarantee, mortgage refinancing and sukuk/Islamic funding for affordable housing.
The CEO who shared the success story of Pakistan, stated that as the housing finance expands, there should be more housing products and more construction.
He said “I believe that there should be housing for all, everybody should have access to finance, so they can easily borrow money, buy houses, they can start housing project, and there should be incremental houses”
Harping on how the Pakistan Mortgage Refinancing Company ensures impact in housing provision in the face of profit maximization and government regulations and policies, Saleem said they learnt from similar International experiences.
Delineating on his view, he said they designed their own regulatory framework to enable them operate optimally, adding they basically requested some consensual privileges for their customers from Central bank of Pakistan.
“We ask the central bank that our customers will not require to have a general provision against the laws of mortgage refinance, this gave incentive to the commercial banks that they don’t need to reserve anything
“It means their capital adequacy has improved. So they have a more space to lend to end users as well”.
He stated that as part of efforts to optimize the company, they negotiated with the government of Pakistan to give them maximum support. “This also gives the company the space that they can use this money to lend to commercial banks”
According to him, they designed parameters to help consolidate their efforts. “Any bank who wants to obtain services from Pakistan Mortgage Refinance Company, they have to adhere to and maintain these standards – no to value ratio, standardized applications forms for all customers, standardized documents required from the customers so these basically help”
“It also help the end user and the general public so they can easily apply for mortgage housing and mortgage loans. Because of this exercise, it became very easy to borrow money from this commercial banks”.
He stated that before establishing Pakistan Mortgage Refinancing Company, there was no fixed market product available for the general public, “because of this Mortgage Refinance Company, we were able to launch fixed market products”
“The bank was giving at a cheaper rate to the commercial banks and we asked the commercial banks to pass on this benefits for the customers,” and this easy access and relatively affordable rate to the commercial banks contributed to “our success story”.
The CEO, Saleem is also a development finance expert, trained regulator and economist. He extensively worked in various departments at State Bank of Pakistan (Central Bank), Karachi. Previously, he also worked as a Chief Operating Officer of Pakistan Mortgage Refinance Company (PMRC) and converted PMRC from an idea into a reality. He was also visiting professor at Center for Business Management (CBM) Karachi.
He also worked as Director, Development Finance Support Department and Quality Assurance department, State Bank of Pakistan. Previously his posting includes as a Chief Manager and Senior Joint Director, Infrastructure and Housing Finance Department with State Bank of Pakistan, Karachi.
He has extensive experience of Housing Finance, Builder Finance public and private sector development, Capital market development, credit enhancement mechanism, including refinance, risk sharing and creating regulatory framework for private sector development and banking regulation.
Dr. Saleem also has expertise in measuring power and banking sector performance, power sector regulation and infrastructure related fields.
Dr. Saleem holds master of Economics (MSC) degree, Master of Philosophy in Economics (M.Phil) and Doctor of Philosophy (PhD) degree from Australian National University Canberra, Australia. He also did certificate on Housing Finance from Wharton Business School, University of Pennsylvania, USA. He also completed a certificate on Micro Finance Policy and Regulation at Boulder Institute, International Training Center, ILO, Turin, Italy.
Housing Development Advocacy Network is the largest non-profit, non-governmental organization promoting affordable housing in Africa. They are currently in partnership with a number of public stakeholders including the Senate Committee on Housing to enact some laws that will help develop the country’s housing sector.
