In line with international best practices, SBP issues various regulatory instructions and guidelines which describe the standards of prudent conduct to which the regulated entities are expected to adhere. These standards need to be backed up by effective supervisory methods. In order to identify potential risks that may impact the safety and soundness of a Bank/DFI/MFB and assess the suitability of various supervisory actions, SBP relies on a variety of supervisory pillars to carry out this work such as On-site Assessment, Off-site Supervision and Enforcement & Resolution of Problem Institutions. The primary tools being used for assessments are CAMELS and CAELS rating systems.

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