The State Bank of Pakistan (SBP) has allowed banks and development finance institutions (DFIs) to extend loans to meet the cost of ancillary auto items while sanctioning auto loans for the ex-factory tax paid price fixed by the car manufacturers.
The ancillary items underlined by the SBP include CNG kits, vehicle tracking devices like Global Positioning System (GPS) commonly known as “Tracker” and others. The regulator, however, has barred the banks and DFIs from financing the premium charged by the dealers and investors over and above the ex-factory tax paid price of cars and other vehicles, fixed by the manufacturers. The move came after the State Bank amended Regulation R-11 of the Prudential Regulations for Consumer Financing and notified the same to the banks and DFIs through BPRD Circular No 06 yesterday.
“While allowing auto loans, the banks and DFIs shall ensure that the minimum down payment does not fall below 10 percent of the value of the car/vehicle,” the circular warned. It said the banks and DFIs may extend auto loans for the ex-factory tax paid price fixed by the manufacturers and the cost of ancillary items desired by the borrower to be fitted in the vehicles.
