Every bank which has been granted a License under Section 27 of the Banking Companies Ordinance, 1962 (BCO) is required to obtain a Certificate of Commencement of Business from the State Bank of Pakistan (SBP) before commencement of its banking business/operations. Therefore, to streamline the process for evaluating the request for commencement of banking business, the SBP has decided to issue this circular.

2. For the purposes of this circular the following words used shall have the following meanings:

a) “Applicant” means any bank which has been granted a License but has not yet commenced its operations. b) “Application” means an application made by the Applicant for obtaining the Certificate of Commencement of Business under this circular. c) “Certificate of Commencement of Business” means a Certificate of Commencement of Business issued by SBP for allowing a bank to start its banking operations. d) “Committee” means the committee constituted by the SBP for the evaluation of the Applications, issuance of the Certificates of Commencement of Business and performance of other ancillary functions. e) “License” means the license issued by SBP under Section 27 of the BCO. f) “Sponsor/Major Shareholders” means the meaning ascribed thereto in the BPRD Circular No. 4 of 2008. g) “Sponsor/Major Shares” means the meaning ascribed thereto in the BPRD Circular No. 4 of 2008.

3. All Applications for obtaining Certificate of Commencement of Business shall be filed to the SBP within a period of six (6) months from the date of issuance of the License. In the event of failure of a bank to apply to the SBP for obtaining a Certificate of Commencement of Business, its License shall lapse on the expiry of six (6) months from the date of issuance of the License.

4. On receiving an Application for obtaining Certificate of Commencement of Business within the time limit prescribed in para 3 above, the Committee, constituted for the purpose by the SBP, shall assess the application after inspection and investigation of the records and affairs of the Applicant for its compliance with the following conditions:

a) The Applicant has accepted and complied with all the terms and conditions contained in its License, or subject to which the License was issued. b) The Applicant is compliant of the BCO, State Bank of Pakistan Act, 1956 and the circulars/directions/instructions issued by SBP from time to time. c) The Sponsor/Major shareholders, directors and Chief Executive Officer of the Applicant are compliant of the BCO and the Circulars/directions/instructions issued by SBP from time to time. d) The Applicant has met the Minimum Capital Requirement prescribed by the SBP from time to time. e) The Sponsor/Major Shareholders of the Applicant have deposited their shares in the blocked account with Central Depository Company of Pakistan Limited (CDC) in compliance with BPRD Circular No. 4 of 2008. f) In case of Islamic Banks, the Applicant has submitted a certificate that the procedure/process manuals regarding all Products, Operations, Credit & Risk Management, Treasury, Internal Control including Shariah Compliance, Shariah Audit, Information Technology Systems and HR have been prepared/revised and approved by the Sahriah Advisor (Shariah Board w.e.f. 1st January, 2015) and the Board of Directors of the bank.

5. Provided the Committee is satisfied that the Applicant has complied with all the conditions, the SBP shall issue the Certificate of Commencement of Business to the Applicant.

6. The Applicant whose Application has been rejected, may re-apply once to the SBP, after meeting the deficiencies and making due compliance with all the conditions, within a period of thirty (30) days from the date of rejection of his Application and not afterwards.

7. The License of the Applicant shall lapse on the expiry of thirty (30) days from the date of rejection of his Application for commencement of business unless the Applicant re-applies in which case the License shall lapse on the date of rejection of the Application.

8. The above instructions/directions have been issued in exercise of the powers conferred upon SBP under Section 27 read with Section 41 of the Banking Companies Ordinance, 1962. All the banks are required to ensure meticulous compliance of these instructions/directions.

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