Circulars/Notifications - Banking Policy & Regulations Department  
 BPRD Circular No. 06 of 2013
August 15, 2013

The Presidents/Chief Executives
All Banks/DFIs

Dear Sirs/Madam,

Implementation of Basel III Capital Instructions

Please refer to instructions on the implementation of Basel II issued vide BSD circular No. 8 of June 27, 2006.

The State Bank of Pakistan has decided to implement the Basel III reforms issued by the Basel Committee on Banking Supervision (BCBS) to further strengthen the capital related rules.

The major changes under the Basel III reform package pertain to numerator of the Capital Adequacy Ratio (CAR) i.e., eligible capital. The enclosed instructions will replace Chapter 1 of the instructions issued under the above mentioned circular pertaining to eligible capital and related deductions. The circular also includes instructions on leverage ratio. Moreover, instructions pertaining to rest of the changes introduced under Basel III reforms will be issued separately.

These instructions will become effective from December 31, 2013 in a phased manner with full implementation intended by December 31, 2019. The transitional arrangements are broadly in line with the internationally agreed timelines and intended to ensure smooth implementation by allowing sufficient time to banks/ DFIs for adjustment in their capital planning.

Banks/ DFIs are advised to submit their CAR returns based on the instructions contained in this circular in parallel run for 3rd quarter of 2013. However, from quarter ending December 31, 2013, the banks/ DFIs will submit their CAR returns in the light of these instructions.

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

Please acknowledge receipt.

Encl. Basel III instructions

Yours truly,


(Shaukat Zaman)

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