Samba Bank Offers Naya Pakistan Housing & Construction Finance Scheme

As per the SBP regulations, in a bid to encourage construction and development investment in the region, Samba Bank announced a ‘Naya Pakistan Housing and Construction Finance’ scheme.

Let’s see what are main highlights, requirements, and criteria for the scheme.

Eligibility Criteria For Developers And Builders

• Builder/Developer must have experience of at least 3 years and a strong track record
• The Builder/Developer Team should have a proper building control authority building/developer certificate, if appropriate.
• The property free of encumbrances, charges, and liens on which the building will be constructed should have a valid and marketable title if it is given as equity to the builders/sponsors.
• Copies of the documentation needed for submission of the request:

1. The firm/company registration certificate
2. Association/Partnership Deed/Business Charter Memorandum and Papers (in case of Sole Proprietorship)
3. List of technical workers
4. Certificates and experience certificates from the Pakistan Engineering Council
5. List of projects recently finished (if any), along with copies of completion certificates sent to the authorities concerned
6. Any other document(s) that the bank/DFI needs

Highlights Of The Initiative By Samba Bank

The financial institution seeks to assist builders and investors in the beginning and continuity of their designs, according to the information revealed. The amenities mentioned under the Naya Pakistan Housing and Construction Finance entail:

• Quick processing
• World-class customer service
• Competitive market rates
• No repayment penalty
• Tenor up to 5 years

Assessment Of The Projects Of Builders & Developers

• A project should be able to produce adequate cash flows to fund its debt.
• Financial feasibility study of the Planned Project adopted by a reputed auditing Company, providing details on the projected economic circumstances of the project, capital spending, financial forecasts, and the denied completion period.
• Banks/DFIs shall procure the technological feasibility report independently reviewed by a respectable engineering company registered with the authority concerned, such as the Pakistan Engineering Council, etc.
• Banks/DFIs can review the financial and other related documents submitted as part of their risk-assessment process by the builder/developers. Banks/DFIs should objectively assess the likelihood of multiple risks and their possible effects on project feasibility and hedge the known and potential risks by launching the appropriate credit and risk controls.

Other Arrangements

• A sum can be sanctioned for the project for a term of up to 5 years on the basis of evidence submitted by the contractor. Banks/DFIs can also offer a repayment moratorium duration to builders/developers, as per the Board’s approved policy/product.
• Once the project has obtained formal approval and the said plot is mortgaged with the bank/DFI, sums will be issued to the builders/developers via the escrow account held with the bank/DFI according to the negotiated schedule in compliance with the development schedule. Banks/DFIs can acquire e-CIB from the company’s directors and sponsors to track the entity’s overall exposure and financial health.
• Banks/DFIs shall create a framework for periodic inspection during the development process to ensure that the funding is appropriately used. The Project Account(s), Project Escrow Account, and all other accounts considered appropriate for the execution of the project shall be duly scrutinized/audited for this reason. This operation can be carried out by the workers of banks/DFIs or by outsourcing. In addition, in accordance with financial covenants and periodic arrangements, an inspection of the project must also be carried out at least once every six months during the construction process.

Construction Phase

• Banks/DFIs can track the progress of the project by periodic review by a technical contractor during the construction process. The professional consultant’s scope may include an evaluation of the current progress of the project toward the expected progress and accepted targets, an analysis of the building condition, and the detection of bottlenecks that occur or are likely to arise at the conclusion of the project. Both draw-downs can be aligned with professional contractor qualifications.
• As the primary source of repayment is by cash flows from the down payment and payment by individual investors, through securing an assignment of project receivables, banks/DFIs need to protect the loan.
• Banks/DFIs will report their lien/mortgage with the Registrar of Companies to ensure the safety of the lien/mortgage on the business entity’s properties, ensuring that the collateral is not mortgaged for future borrowing with any other lending institution.
• Builders/developers should be directed to strictly obey the by-laws/building rules and the approved proposal at the time of approving/releasing the funding number.

Wrapping It Up

You can simply call +92 21 1111 SAMBA (72622) or visit their official site at www.samba.com.pk for more information. Or simply consult with our experts here.