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SBP tightening policy on auto loans to snub import of luxury vehicles: Ateeq

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KARACHI: Ateeq ur Rehman (economic & financial analyst) has said that there is a huge trade gap between import and exports which is alarming. Trade deficit is widening day by day. There is an urgent need of taking immediate measures to lesser the gap between imports and exports, therefore SBP’s tightening policy of consumer lending rules to limit auto loans is a wonderful step for controlling the massive rise in imports but it is like reducing the necessary facilitation of a deserving consumer who is already under stress of huge inflation, says a Press release.
He said we agree that car financing in Pakistan soars to record high. SBP has made Auto financing limits availed by one person from all banks/DFIs, in aggregate shall not exceed Rs3,000,000, at any point in time. Further under the new regulations, the maximum tenure of auto finance has been reduced from seven years to five years and minimum down payment for auto financing has been increased from 15 percent to 30 percent. Thus, this will not only help reducing pressure on balance of payment and current account deficit but also shrink unnecessary increase in vehicles.
Many people in Pakistan have 5 to 6 cars per family, how can an under developed and below poverty level country with enormous external debt burden afford such economic growth forecast. Also, so many cars on a dilapidated infrastructure causes immense traffic jams every now and then.
Yes, we not only need stringent consumer/auto financing policies but also encouragement to motorcycle financing or bike ijaras. Due to devastated/transport system of Karachi. This is like helping youth, commuters, laborers, low-income groups, women and children.