The Poverty Reduction Strategy Paper for Pakistan1 lays considerable emphasis on housing finance as a major intervention for poverty reduction. The national Housing Policy of 2001 has as its corner stone housing for the poor and needy. The Interim Poverty Reduction Strategy of Pakistan (IPRSP) completed in November 2001 explicitly recognised the importance of Housing for the poor. It stated that “housing is a fundamental human need as it provides physical, economic, and social security to the poor. However, depressed economic growth, rising population, and rapid urbanisation have resulted in an increased demand for housing infrastructure. It stated that the present backlog of housing units is more than 4 million in the country with the result that millions are forced to live in Katchi Abadis or under-serviced slum settlements. Estimates for urban population living in Katchi Abadis range from 35-50 percent”.