The Presidents/ Chief Executives
All Banks/DFIs
Dear
Sirs/Madam,
Guidelines
on Country Risk
Please refer to BSD Circular No. 7 dated
August 15, 2003 notifying the guidelines on four major
risk categories i.e. Credit, Market, Liquidity and Operational
risk.
Rapidly changing conditions in the various countries of
the world have emphasized the importance of Country Risk
Management. Even though our banks have relatively low level
of cross border exposures, the importance of country risk
management cannot be ignored. Consequently, SBP has prepared
the attached guidelines for Country Risk Management. Banks/DFIs,
having cross border exposures both on and off balance sheets,
are advised to follow these guidelines. However, the guidelines
are flexible in that the banks/DFIs can adapt them in line
with the size and complexity of their cross border business.
All banks/DFIs are required to put in place their respective
Country Risk Management policies and procedures duly approved
by their BOD as soon as possible, but no later than three
months from the date of this circular. A copy of the policy
should be sent to the Banking Supervision Department, State
Bank of Pakistan. The SBP inspectors, during the course
of their regular inspection of the banks/DFIs, will check
the policies and procedures on Country Risk Management
of the concerned bank/DFI.
Please acknowledge receipt.