ISLAMABAD: The government’s recently launched Rs3.2 trillion housing finance scheme may face serious legal and constitutional challenges due to its reliance on interest-based lending, which appears to conflict with Pakistan’s constitutional deadline to eliminate interest (riba) from the financial system by January 1, 2028.
According to official sources, the structure and duration of the scheme raise clear concerns when viewed in light of this constitutional requirement. The government has announced a five-year financing plan under which Rs321 billion has been allocated in the first year alone to support the construction of 50,000 homes. Overall, the scheme aims to finance 500,000 housing units across the country.
However, the plan involves issuing new interest-based loans that could extend well beyond the 2028 deadline. Each loan under the scheme carries a repayment period of up to 20 years, meaning that loans issued close to or after 2028 would continue involving interest payments for decades—directly contradicting the constitutional mandate.
The issue is further complicated by the scheme’s pricing structure, which sets a fixed markup rate of 5% for the first 10 years, after which market-based interest rates will apply. Critics argue that this not only sustains interest-based banking but potentially expands it, despite the state’s obligation to phase it out.
Sources indicate that this critical constitutional aspect may not have been fully considered during the planning of the scheme. Attempts to seek comments from Information Minister Attaullah Tarar on the matter were unsuccessful.
Prime Minister Shehbaz Sharif formally launched the “Apna Ghar Program” earlier this week, describing it as a “sacred duty” and a driver of economic growth. The initiative aims to provide loans of up to Rs10 million for low-income individuals to build houses on plots of up to 10 marlas, with repayment spread over 20 years.
The program is also intended to stimulate the construction sector and generate employment opportunities nationwide, including in all provinces, as well as Azad Jammu and Kashmir and Gilgit-Baltistan.
