The Presidents/Chief Executives
All Banks/DFls

Dear Sirs/ Madam,

Minimum Capital Requirements – Implementation of Basel II

Please refer to BSD Circular No. 8 dated June 27, 2006, wherein detailed instructions and timeline for the implementation of Basel II in Pakistan were issued.

2. In order to report the calculation of capital adequacy of the banks/DFIs based on the parameters provided in the above referred circular, the formats are being prescribed. These formats primarily cover Standardized Approaches for credit & market risk and Basic Indicator and Standardized approaches for operational risk.

3. All banks/DFIs are advised to submit quarterly statements on parallel calculation of their capital adequacy ratios, on consolidated as well as on standalone basis, on the enclosed formats within 30 days of the end of each calendar quarter. However, reporting for the quarters ended 31st December 2006 and 31st March 2007 will be made by 30th April 2007 and 31st May 2007 respectively.

4. During the parallel run banks are also advised to continue to calculate their capital adequacy on the basis of guidelines issued vide BSD Circular No. 12 dated 25th August 2004 and submit the results of both the calculations on quarterly basis.

Please acknowledge receipt.

Encls:

Reporting formats

Explanatory References