In order to reduce the bulging import bill and recover the balance of payment deficit, the State Bank of Pakistan (SBP), on Tuesday, reduced the tenure for car financing for consumers. The government has already restricted the import of Completely Knocked Down (CKD) vehicles alongside 37 other luxury items.
According to the details, the State Bank of Pakistan (SBP) has reduced the maximum tenure for car financing from five years to three years for vehicles with engine displacement of 1000cc or above. Meanwhile, the maximum tenure for auto financing has been reduced from seven years to five years for vehicles up to 1000cc engine displacement.
Moreover, other amendments issued earlier, vide BPRD Circular Letter No. 29 dated September 23, 2021, will henceforth be applicable on financing for all locally assembled / manufactured vehicles, including on financing for vehicles of up to 1,000 cc engine displacement and locally assembled / manufactured electric vehicles.
However, the regulatory treatment of Roshan Apni Car product communicated earlier to RDA participant banks will continue to remain effective.
The above amendments in the Prudential Regulations for Consumer Financing (PRCF) will be applicable, with immediate effect, on new financing facilities where the Banks/DFIs have not granted the approval yet. All other instructions on the subject shall, however, remain unchanged.
It is pertinent to mention that SBP has also increased the monetary policy rate by 150 basis points (BPS) to 13.75 percent, which will also impact the car financing in Pakistan, making it more difficult for consumers as monthly installments will go beyond the reach of many people.
Read more: SBP Increases Interest Rate by 150 BPS to 13.75%.