Circulars/Notifications - Banking Policy & Regulations Department  
 BPRD Circular No. 01 of 2019
March 11, 2019

The Presidents/Chief Executive Officers
All Banks/ DFIs

Dear Sir/ Madam,

Basel Capital Adequacy Framework: Lowering of Risk Weight on Low Cost Housing Finance

    Please refer to the instructions contained in BSD Circular No. 08 of 2006 dated June 27, 2006 regarding Minimum Capital Requirements – Implementation of Basel II.

2. Under the existing instructions, the standardized risk weight as applicable on banks/ DFIs’ exposure to “Residential Mortgage Finance” is 35%. However, to support the growth of “Low Cost Housing” in Pakistan, it has been decided to lower the risk weight to 25% for banks/ DFIs’ exposure to “Low Cost Housing” wherein borrowers are meeting the relevant criteria as prescribed by SBP, from time to time.

3. Currently, “Low Cost Housing” exposure of only those banks and DFIs shall be entitled to receive the preferential risk weight of 25% for capital adequacy purposes, wherein borrowers are meeting the requisite criteria as specified in IH&SMEFD Circular No. 04 of 2019.

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

Please acknowledge receipt.



Yours Truly,


(Muhammad Akhtar Javed)

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