PM Shehbaz Sharif Seeks Report on Aligning Housing Loans with Interest-Free System

Islamabad: Shehbaz Sharif has taken notice of a media report raising concerns over the compatibility of the government’s housing finance scheme with the constitutional deadline for eliminating interest-based systems.
According to sources, the prime minister has directed relevant authorities to conduct an immediate review and submit a fact-based report on whether the Rs3.2 trillion housing finance initiative aligns with the country’s transition toward an interest-free financial system.
The move follows a report by The News International, which highlighted that the structure of the “Apna Ghar Program” could allow interest-based loans to continue beyond January 1, 2028—the deadline set under the 26th Constitutional Amendment for shifting to a Shariah-compliant financial system.
Officials have been instructed to assess whether the scheme’s design—featuring a five-year loan disbursement plan and a 20-year repayment period—meets constitutional requirements or needs restructuring. Under the program, loans of up to Rs10 million are being offered, with a fixed markup of 5% for the first 10 years, after which market-based rates will apply.
The government has allocated Rs321 billion in the first year to finance 50,000 housing units, with total financing expected to reach Rs3.2 trillion over five years.
Sources say the review will also examine the legal and financial implications of continuing interest-based lending during the transition period leading up to 2028, and whether the scheme can be converted into a fully Shariah-compliant model.
This development reflects the government’s recognition of the sensitivity of the issue, particularly in light of its constitutional commitment to eliminate interest. Earlier this week, the prime minister described the housing initiative as a key step toward providing affordable housing to low-income groups and boosting economic activity.
Financial regulators, banking experts, and legal authorities are being consulted, and a comprehensive report is expected to be submitted soon. Ishaq Dar, along with other senior members of the economic team, is also part of the consultative process.
The outcome of this review could have broader implications for other government-backed financing schemes, especially those reliant on conventional banking structures, as Pakistan moves toward fulfilling its constitutional obligations regarding the elimination of interest.