Page 1

Maryyam Bint-E-
Aslam
M09MBA053

Rabia Aimun

M09MBA062

Page 2
CONSUMER
FINANCING

Page 3
RABIA AIMUN

Page 4
 CONSUMER
“A consumer is an entity that receives
or consumes products and has the
ability to choose between
different products.”
CONSUMER FINANCING
 CONSUMER FINANCING
CONSUMER FINANCING

“Consumer financing refers to any kind of

lending to consumers by the banking
sector and financial institutions.”
 According to Prudential
According to Prudential
Regulations
Regulations

“Any financing allowed to individuals for

meeting their personal, family or
household needs”
 Consumer Financing
Products

Consumer financing has been categorized

in following disciplines:
- Personal loans
- Auto loans
- Housing finance
- Credit cards
 Analysis of Consumer
Financing

CONSUMER Rupees Rupees

FINANCING (in billion) (in billion)
PRODUCTS 2008 2009
Credit Cards 33.538 42.822
Personal Loans 120.57 142.373
Auto Loans 97.777 105.444
House Loans 43.205 54.205
Analysis of Consumer
Financing
 Rabia Aimun
&
Maryyam Bint-E-
Aslam
Page 12
 Comparative Study
Standard Chartered

Bank Pakistan
(Pvt) Limited

National Bank of
Pakistan
 Introduction

• Standard Chartered Bank Pakistan (Pvt)

Limited - A locally embedded international
bank
• Largest international bank in Pakistan
• Operating in Pakistan for 140 years
• First established its operations in 1863 in
Karachi
• Employs over 9,000 people
• 162 branches
 Introduction
Introduction

• Largest commercial bank

• Established on November 9, 1949
• Major business partner of the govt.
• Act as an agent of SBP
• Listed in all stock exchanges
• Provides services to individuals ,
corporate entities and govt.
• 1250 branches
 1.House Financing
Home Purchase NBP Saiban

• Repayment tenor  Home purchase &

of 1 to 20 years Construction
• Loan to value up to 80% of • Financing Amount Up to 35
property value Million
• Minimum net income as low • Financing Period 3 to 20
as PKR 20,000/month Years
• Mark-up rate for:
Salaried: 17.00%
Self-Employed: 17.50%
• Documentation required
 House Financing (cont’d)
Home Credit
• Loan amount of up to PKR  Home Renovation
10,000,000 • Financing Amount Up to 15
• Repayment tenor ranging Million
from 1 to 10 years • Financing Period 3 to 15 Years
• Loan to value maximum of  Purchase of Land &
up to 60 % of the property Construction
value • Financing Amount Up to 35
• Million
Minimum Net Income as low
• Financing Period 3 to 20 Years
as PKR 20,000 per month
• Documentation required
 2. Personal Financing
Ready Cash
• Instant Credit up to Rs.
500,000
• Lowest Mark-up
• Pay as You Utilize
• No Penalties on Early
Repayment
• Nationwide Accessibility
• Simple Eligibility Criteria
Advance Salary
• 20 months salary in
advance
• Minimum documentation
• Repayable in 5 years
• 1 percent processing
charges ; no collaterals
• The product is for NBP
account holders &
Government or related
organization employees
 Personal Financing (cont’d)
Student Loan

• admission on merit
• at least 70% marks in the last public examination.
• unable to pursue studies due to financial constraints.
• age bracket
For Graduation Not exceeding 21 Years
For Post-Graduation Not exceeding 31 Years
For Ph.D Not exceeding 36 Years
 Standard Chartered Bank Pakistan doesn’t provide any such
facility to students.
 3. Auto Financing

Standard Chartered doesn’t National Bank of Pakistan

provide auto financing doesn’t provide auto
facility. financing facility.
 4. Credit Cards

Wide range of credit cards

 Saadiq VISA Credit Cards
 MasterCard
National Bank of Pakistan
 VISA Card
doesn’t provide any type of
 Easy Credit Card
credit cards to its
 American Express Credit
customers.
Cards
 PIA Co-branded Credit Card
Maryyam Bint-E-
Aslam

Page 22
 Growth of Consumer
Financing

• Overview
• Aggressive Promotion of Consumer
Financing in
2001
• Highest Share by Personal Loans
• Record Profit Earning by
Banking Sector
 Consumer Financing Losing
Its Luster In Pakistan

• Sharp Contraction in Every Segment of

Consumer Financing During 2009-10
• Significant Shrinkage in Credit Cards
Business
• Steep fall in Outstanding Loans for Car
purchasing
• Sharp Decline in Personal Loans
• Decline in loans for House building
• Factors for Decline
 Consumer Financing Issues

• Higher Interest Rate

• Variable Interest Rate
• Deteriorating Quality of Services
• Lack of Consumer Education
• Poor Information Disclosure
Practices
 Recommendations
• SBP should exercise its powers
to determine a reasonable rate
of return.
• Mark up charged on Consumer
financing products should be
reduced to a substantial level.
• Full compliance with SBP
regulations should be exercised.
 Recommendations

• Transparency and Access to

Information related to Consumer
Financing Products and Services.
•  Increase consumer awareness, give
clear instructions and guidance.
• All applicable charges on consumer
loans should be explained before
signing the contract.
CONCLUSION
Page 31