All Banks 

Dear Sirs, 

            MINIMUM CAPITAL REQUIREMENTS 

Please refer to BPRD Circular No.36 dated 4th November 1997 on the above subject. 

         2.    The instructions contained in paragraph 4 (iii) of the Annexure to the above BPRD Circular of 1997 is substituted as under: 

“Sub-ordinated debt will be limited to a maximum of 50% of the amount of equity and will also include rated and listed subordinated debt instruments (like TFCs/Bonds) raised in the capital market. To be eligible for inclusion in the supplementary capital, the instrument should be fully paid up, unsecured, sub-ordinated as to payment of principal and profit to all other indebtedness of the bank, including deposits and should not be redeemable before maturity without prior approval of the SBP. Further the bank should also have maintained the Minimum Paid up Capital as prescribed by SBP from time to time.” 

          3.   The banks before issuing any subordinated debt instruments (like TFCs/Bonds), to qualify for inclusion in supplementary (Tier-II) capital, will be required to obtain approval of the State Bank. 

4     The Annexure to this circular contains rules relating to sub-ordinated debt instruments which shall form part of the regulations relating to calculation/other requirements on minimum capital. 

          5.    Other instructions on the subject shall, however remain unchanged. 

               Please acknowledge receipt.