State Bank Shortens the Term of Auto Financing Loans

As the government grapples with a ballooning import bill, the State Bank of Pakistan (SBP) has lowered the consumer financing duration for automobiles. According to the announcement, the financing term has been reduced to a maximum of three years for automobiles with engine displacements greater than 1,000cc, and to five years for those with engine displacements less than 1,000cc.

According to the circular, the SBP has decided to change the Prudential Regulations for Consumer Financing (PRCF) as follows:

"The maximum duration of an auto credit facility has been decreased from five (5) years to three (3) years for cars with engines larger than 1,000 cc and from seven (7) years to five (5) years for vehicles with engines smaller than 1,000 cc."

Other revisions published earlier in September 2021, according to the central bank, will now apply to financing for all locally assembled/manufactured cars, including financing for vehicles with engine displacements up to 1,000 cc and locally assembled/manufactured electric vehicles. However, the regulatory treatment of the Roshan Apni Car product that was previously disclosed to RDA participating banks would remain in force.

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