Circulars/Notifications - Banking Policy Department  
 BPD Circular No. 35
October 28, 2003

The Chief Executives,
All Banks / DFIs.

Dear Sirs / Madam,


PRUDENTIAL REGULATIONS

In exercise of the powers vested in it under the Banking Companies Ordinance, 1962, the State Bank of Pakistan is pleased to issue the following three separate sets of Prudential Regulations:

i) Prudential Regulations for Corporate / Commercial Banking
ii) Prudential Regulations for SMEs Financing
iii) Prudential Regulations for Consumer Financing

2. The Prudential Regulations for Corporate/Commercial Banking have been divided into four sections with prefixes “R” for Risk Management, “G” for Corporate Governance, “M” for Know Your Customer & Anti Money Laundering and “O” for Operations. The Prudential Regulations for SME Financing contain only the regulations pertaining to Risk Management listed under the prefix “R”, and the other areas viz. Corporate Governance, Know Your Customer & Anti Money Laundering and Operations will be governed by Prudential Regulations as listed for Corporate/Commercial Banking under “G”, “M”, and “O” respectively. Similarly, Corporate Prudential Regulations in categories “G”, “M” and “O” will be applicable in case of Consumer Financing as well. However, in case of Prudential Regulations for Consumer Financing, in addition to regulations pertaining to Risk Management under prefix “R”, some regulations pertaining to Operations (specific to each product) under the prefix “O” have been prescribed which will also be binding on banks/DFIs in case of Consumer Financing.

3. These Prudential Regulations do not supercede directives and instructions issued by the State Bank of Pakistan in respect of areas not covered under above regulations, which also include the instructions on penalties.

4. In order to provide sufficient time to banks/DFIs to comply with these Prudential Regulations, the same shall become effective from January 1, 2004. The new sets of Prudential Regulations have been placed at SBP web-site http://www.sbp.org.pk which may be accessed / downloaded for consultation and ease of reference at any time. In case of any clarification, the banks/DFIs may approach the BPD help desk at http://www.sbp.org.pk/bpd/helpdesk.asp.

5. Banks / DFIs are advised to ensure circulation of these regulations among all their offices / branches for meticulous compliance in letter and in spirit. Non-compliance of Prudential Regulations will lead to punitive action under the relevant provisions of Law. It may be noted that the transactions structured in a manner to circumvent these Prudential Regulations will tantamount to violations of Prudential Regulations and shall be dealt with accordingly.

6. Please acknowledge receipt.


Yours faithfully,
(Muhammad Kamran Shehzad)
Director


BPD Circulars/ Circular Letters issued in 2002
       
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