SBP raises minimum capital requirement for banks, DFIs

Pakistan’s central bank has reset capital floors for lenders, setting the threshold at Rs20 billion for locally incorporated banks, including Islamic subsidiaries, and Rs10 billion for development finance institutions. Mettis Global reported on October 28 that the directive appeared in a circular issued the previous day, with existing institutions given until December 31, 2030 to comply.

Foreign banks operating through branches must hold assigned capital, net of losses, of Rs5 billion if they have up to five branches, or Rs10 billion if they have six to 50. The SBP cited the higher costs of setting up and running financial institutions sustainably, and allowed statutory reserves under Section 21 of the Banking Companies Ordinance, 1962 to count toward the requirement. Those reserves cannot be withdrawn without prior SBP approval, while the circular also updates instructions issued in 2008, 2009 and 2014.