The Presidents/Chief Executive Officers,
All Banks/DFIs.

Dear Sirs/Madams,

AMENDMENT IN REGULATION R-4 OF PRUDENTIAL REGULATIONS FOR CONSUMER FINANCING

Please refer to BPRD Circular No. 10 of 2016, whereby revised Prudential Regulations for Consumer Financing were issued.

2. It has been decided to make the following revisions in Regulation R-4 of Prudential Regulations for Consumer Financing as under:-
   
   REGULATION R-4
   GENERAL PROVISION AGAINST CONSUMER FINANCE
   
   1. The term “general reserve” used in Regulation R-4 of Prudential Regulations for Consumer Financing shall henceforth be read as “general provision”.
   2. Banks/DFIs, subject to the conditions prescribed below, may release and use the general provision maintained in terms of Regulation R-4 of Prudential Regulations for Consumer Financing against the secured and unsecured consumer finance portfolio:
      1. The general provision will only be available for use to make good the specific provision requirement of the consumer financing portfolio; and,
      2. The aforesaid treatment will expire on December 31, 2021. Thereafter, the general provision against the consumer financing portfolio will be maintained as per the method prescribed in the Regulation R-4 of Prudential Regulations for Consumer Financing prevailing on July 09, 2020.
   3. BaThe Banks/DFIs may, as per their own discretion and in terms of relevant internal policies, maintain the general provision against consumer financing.
3. All other instructions on the subject shall, however, remain unchanged. The Banks/DFIs are advised to follow the regulations in letter and spirit. Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.
4. Please acknowledge receipt.