Banks may get power to take houses after 90 day default period

Pakistan’s government plans to let banks seize mortgaged homes after 90 days of loan default notices.

This change aims to boost housing loans by giving banks stronger recovery powers. The National Assembly’s Finance Committee reviewed the proposal but raised serious concerns about borrower protection. The Financial Institutions (Recovery of Finances) Ordinance, 2001 faces major amendments. Banks would send three 30-day notices to defaulting homeowners. If payments stay overdue after 90 days, banks can sell the property. Committee members worry this gives lenders too much power over struggling families.

Standing Committee Chairman Syed Naveed Qamar deferred the bill for more review. He stressed balancing bank confidence with homeowner safeguards. The panel wants fair rules that protect low-income buyers from unfair property grabs. This proposal supports the Prime Minister Apna Ghar Programme, launched in August 2025. The scheme offers Rs 10 million home loans at just 5 percent markup for 20 years. By April 2026, it approved 8,990 applications worth Rs 37 billion and disbursed Rs 5 billion to 1,845 families.

Pakistan’s housing finance lags far behind with mortgages at only 0.3 percent of GDP. Government targets 500,000 homes in four years, needing Rs 3.2 trillion. Finance Secretary admitted funding gaps exist but promised adjustments to meet goals. Lawmakers questioned bank readiness for massive lending. They called for simpler procedures, flexible eligibility, and bigger subsidies for poor families.

Rural and informal workers need easier access to home loans. The committee seeks revised drafts protecting both sides. Banks gain confidence to lend more while homeowners get fair warning periods. New rules would allow loan restructuring before property sales.

Apna Ghar shows government commitment to affordable housing. Success depends on balanced laws, sufficient funding, and inclusive policies. Millions of low-income families wait for homeownership dreams to become reality through sustainable finance systems.