1. Please refer to the BSD Circular No. 08 dated June 27, 2006 regarding implementation of Basel II in Pakistan.

2. In order to clarify the definitions of the Corporate and Retail exposures as provided in the Section No. 2.1.3 and 2.1.5 respectively, of the above referred Circular, it is advised that:-

a. The upper limit of Retail exposures has been raised to Rs. 75 million; and

b. All Public limited companies incorporated under Companies Ordinance, 1984 or any other statute will not fall under the definition of Retail, regardless of their exposure.

Revised definitions are attached.

3. With regard to staff loans of banks/DFIs, it is clarified that staff housing finance qualifying as per definition 2.1.6 ‘Residential Mortgage Finance’ be treated as residential mortgage. Other staff loans shall be treated as Retail or in any other categories provided respective requirements are fulfilled.

4. All other instructions on the subject shall, however, remain unchanged.

Please acknowledge receipt.


Encl: Definitions