Pakistan’s Mera Ghar–Mera Ashiana (MGMA) programme was introduced to expand access to affordable housing finance by offering subsidised home loans of up to Rs3.5 million for first-time buyers. Backed by the government and implemented through the State Bank of Pakistan (SBP), the scheme includes markup subsidies and partial risk-sharing mechanisms.

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What the scheme provides Why private and smaller banks remain cautious Credit risk remains substantial Lower profit margins Strict documentation requirements Long-term liquidity pressures Why borrowers report low satisfaction The bottom line

Despite this support, many private and smaller banks have shown limited enthusiasm in aggressively promoting the product. The reasons are largely structural and financial rather than political.

What the scheme provides

The MGMA scheme allows eligible applicants to obtain subsidised financing for purchasing or constructing small housing units. The government covers part of the markup for a defined period and shares a portion of credit risk with participating banks.

However, banks remain responsible for credit assessment, documentation, and recovery in case of default.

Why private and smaller banks remain cautious

Credit risk remains substantial

Even with risk-sharing, banks carry exposure if borrowers fail to repay. Housing loans typically run for 15–20 years, tying up capital for extended periods. For smaller institutions with limited capital buffers, this increases portfolio risk.

Lower profit margins

Subsidised loans generate thinner margins compared to commercial housing finance or consumer lending products. From a business perspective, banks must weigh operational costs against expected returns.

Strict documentation requirements

Applicants must provide proof of income, first-time ownership status, and verified property documents. In Pakistan’s largely informal economy, income documentation is often incomplete, leading to higher rejection rates.

Long-term liquidity pressures

Housing finance requires stable long-term funding. Many banks rely on short-term deposits, making it harder to expand long-tenor loan portfolios.

Why borrowers report low satisfaction

Many applicants expect a simplified process because the scheme is government-backed. In practice, banks still apply standard prudential regulations and credit checks set by SBP.

Common complaints include:

Lengthy approval timelines
Strict income verification
Limited branch-level awareness
Inconsistent guidance

This gap between policy expectations and operational realities contributes to perceived dissatisfaction.

The bottom line

Private banks are not necessarily unwilling to participate in the MGMA housing scheme. However, long-term risk exposure, lower profitability, and administrative complexity limit aggressive expansion.

For wider adoption, structural adjustments such as stronger risk guarantees, streamlined documentation for informal earners, and improved long-term liquidity support may be necessary.