In order to minimize risks in the settlement of non-performing loans (NPLs) by the banks/DFIs through Debt Property Swap (DPS) and to set minimum standards for DPS transactions, the enclosed set of regulations is being issued with following instructions:

1) Regulations for DPS are effective from the date of issuance. The transactions in-process shall also be concluded as per these regulations, where applicable.

2) However, the banks/DFIs lacking appropriate systems and procedures to ensure full compliance with these regulations are being given a time period of three months, from the issuance of this circular, to streamline and/or develop the required systems and procedures.

3) Those banks/DFIs, which are within the prescribed limits, shall follow the same. While others who have exposure higher than the limits shall approach the State Bank of Pakistan within three months with a well defined plan envisaging compliance of exposure benchmarks within a period of maximum two years.

4) These regulations are in addition to all applicable laws including Financial Institutions (Recovery of Finances) Ordinance, 2001.

 5) The subject regulations are being issued in exercise of powers conferred under Section 41 of the Banking Companies Ordinance, 1962. Any violation will attract punitive action as per law.

Please acknowledge receipt.

Enclosed: Regulations for Debt Property Swap (DPS)