The State Bank of Pakistan (SBP) has amended regulations and imposed a prohibition on loans for the purchase of imported automobiles in order to reduce inflation and imports.
The SBP amended the PRs (PR for consumer finance) under the new Prudential Regulations, according to an official notice. The warning stated that “the revisions in the PRs effectively restrict financing for imported vehicles.”
Automobile finance for imported vehicles is no longer permitted under these restrictions.
According to the SBP, banks lent Rs 360 billion in August, setting a new record for auto loans. Under the new limits, individuals will not be allowed to obtain a car loan for more than Rs 3 million. In addition, the SBP’s warning stated that new credit standards, particularly for automobile, personal, and credit card loans, have been tightened. The loan term has been shortened from seven to five years.
Financing for automobiles with a 1000 cc or bigger engine capacity that are built or assembled in the United States has become more complicated. Personal loan maximum terms have been reduced from five to three years. According to the SBP, the maximum debt-to-income ratio has been reduced from 50% to 40%.
According to the central bank, the new laws will not apply to automobiles built in the nation with engine capacities of up to 1,000 cc, as well as locally manufactured electric vehicles, among other things, in order to protect the purchasing power of the low- to middle-income class.