Please refer to BPRD Circular No. 12 dated August 1, 2007.
It has been brought to the notice of State Bank of Pakistan that some of the banks/DFIs are misconstruing that instructions contained in the aforesaid Circular are applicable on consumer lending products only, which interpretation is not correct. It has been further observed that some of the banks/DFIs are not strictly following the instructions that the margin/spread over KIBOR fixed at the outset of the transactions cannot be increased by banks/DFIs during the tenure of the lending product. This practice has been viewed very seriously.
Banks/DFIs are clarified that instructions issued vide BPRD Circular No.12 of 2007 are applicable on all types of lending products including running finance and working capital loans. It is re-emphasized that the margin/spread over KIBOR once fixed at the outset of the transactions should not be increased by the banks/DFIs during the tenure of the lending product.
State Bank of Pakistan shall, during the course of on-site inspection, particularly check the compliance of the above instructions and necessary action against the delinquent banks/DFIs shall be taken under the relevant provisions of Banking Companies Ordinance 1962.
All other instructions on the subject shall remain unchanged.
Please acknowledge receipt.