Pakistan Mortgage Refinance Company (PMRC) is a liquidity facility that provides refinance/prefinance to Primary Mortgage Lenders (PMLs) to promote housing finance.
A specialized financial institution offering medium to long term financing against a pool of mortgages/assets as security.
Development of primary mortgage market by providing medium & long-term funds and to promote sound mortgage lending practices.
Primary mortgage lenders/financiers providing financing to financial institutions (FIs) either Conventional or Islamic such as Banks/DFIs/HFCs/MFBs/MFIs/NBFCs with housing finance portfolio or those FIs that intend to enter the housing finance space and are regulated by either SBP or SECP.
Yes. PMRC offers financing to Islamic Financial Institutions in Islamic (Shariah-compliant) manner.
Refinance is provided against existing housing finance portfolio of Primary Mortgage Lenders (PMLs).
Prefinance is provided to Primary Mortgage Lenders (PMLs) that intend to generate housing loan portfolio.
For signing of MRA/MMA, approval from the BOD of primary mortgage lender is required.
Primary mortgage lenders will bear the stamp duty cost on MRA/MMA and other agreements.
No. Servicing of loan portfolio is the responsibility of Primary Mortgage Lenders (PMLs).
An account opened on asset side of bank to reflect the mortgage loan receivables in relation to each refinance loan. PMRC shall have a lien on the collection account. Utilization consent will be provided to PML to utilize those funds.
Yes. PMRC offers financing to Islamic Financial Institutions (IFIs) in Islamic mode through participatory structure of Musharakah – Shirkah-tul- ‘Aqd.
Facility that is provided against existing housing finance portfolio of Islamic Financial Institutions (IFIs).
Facility that is provided to the customer to generate housing finance portfolio.
Pakistan Mortgage Refinance Company (PMRC) is a liquidity facility that provides financing (known in conventional spirit as refinance/prefinance) to Primary Mortgage Financier (Banks and IFIs) to promote housing finance.
A specialized financial institution offering medium to long term financing against a pool of mortgages/assets as security.
Development of primary mortgage market by providing medium & long-term funds and to promote sound mortgage financing practices.
The Islamic Mortgage Refinance Facility is a specifically designed for PMRC in a Shari’ah compliant manner based on Shirkat -ul- ‘Aqd. which is known by Musharakah (business partnership).
Musharakah is a joint enterprise or partnership structure in Islamic finance in which partners share in the profit and loss of an enterprise. In other words: “Sharikat al-’Aqd (contractual partnership) means an agreement between two or more parties to combine their assets, labour or liabilities for the purpose of making profits.”
A Musharakah Pool will be created by the Customer on certain agreed contribution by PMRC and the Customer (IBI/IFIs) in the form of assets. PMRC shall purchase housing asset or any other Shariah Compliant Assets / Securities through Asset Purchase Agreement to start Musharakah.
Example:
The assets worth PKR 100M will be purchased at PKR 100M for Musharakah Pool Creation (which would be approximately 99% of pool). Moreover, the Customer will also contribute its assets for the same purpose (which would be 1% of pool).
Consequently, the assets of both the partners (PMRC and Customer) will be commingled/parked in special Musharakah Pool. So, the risks and rewards of such assets will be shared proportionately. Considering the subject joint enterprise (Musharakah Business), both the parties will set their profit-sharing ratio on the same time.
Therefore, in this regard, PMRC as financier/investor will focus on its desired/required/expected rate of return which is known as Hurdle Rate as well. The desired rate of PMRC on its financing/investment may be 8% (PKRV +/- margin) while weighted average profit earning rate on Musharakah pool is 14% (KIBOR/PKRV:11% + Spread:3%). Accordingly,
The Musharakah Profit shall be distributed between the Parties in the following manner:
Musharakah Profit up to the Desired/Expected Profit will be distributed in accordance with the Musharakah Participation Ratios;
Musharakah Profit in excess of the Desired/Expected Profit will be distributed in accordance with the mutually agreed ratio
The profit-sharing ratio will be pro-rata or any other ratio agreed at the time of contract. Loss (If any) will be shared as per their proportionate sharing as per investment.
Primary mortgage financiers providing financing to financial institutions (FIs) such as Banks/DFIs/HFCs/MFBs/MFIs/NBFCs with housing finance portfolio or those FIs that intend to enter the housing finance space and are regulated by either SBP or SECP. PMRC do not provide financing to individuals.
Master Musharakah Agreement (MMA) is legal agreement between PMRC and Islamic (Shariah-compliant) primary mortgage lenders to cover general terms of financing.
By signing of MMA, primary mortgage financier can avail financing facility from PMRC in Shariah Compliant manner.
For signing of MMA, approval from the BOD of primary mortgage financier is required.
Legal agreements will attract stamp duty and Primary mortgage financier will bear that cost.
PMRC provides financing with recourse basis; Servicing of the portfolio is the responsibility of Primary Mortgage Financier.
