Circulars/Notifications - Banking Policy & Regulations Department  
 BPRD Circular Letter No. 45 of 2020
October 21, 2020

The Presidents/ Chief Executives,
All Banks/ DFIs / MFBs

Dear Sirs/Madam

Extension in implementation of SBP Circulars due to COVID19

Please refer to BPRD Circular Letter No 3 of 2020, BPRD Circular No. 02 of 2019, BPRD Circular No. 6 of 2018 and BSD Circular No. 7 of 2003.

2.        In this regard, based on the representation of the banking industry regarding challenges faced by industry in meeting the timeline due to COVID19, it has been decided to extend the timelines for various SBP circulars/guidelines' requirements as given below:

S. No.


Existing Timelines

Revised Timelines


Compliance Risk Management System

March 2020

October 31, 2020


Formulation of RCSA and Development of KRIs

April 2020

October 31, 2020


First external quality review of Internal Audit Function**

June 30, 2020

December 31, 2020


System for Internal Audit Function

December 31, 2020

September 30, 2021




** In case where the FI has already undergone an assessment before issuance of SBP guidelines on Internal Audit Function (IAF), the next assessment would be due after 5 years of the earlier assessment.

3.        In addition to above, following instructions are being issued to facilitate IAF operations during COVID19 situation.

4. Audit/risk review of international jurisdictions (BPRD Circular No. 6 of 2018):
The banks with overseas operations are allowed a onetime wavier from performing annual internal audit and risk reviews of international jurisdictions for year 2020, provided that, the Board Audit Committees (BACs) of respective banks approve adoption of such measure. Subsequently, the BAC and Chief Internal Auditor (CIA) shall take all required measures to ensure that risks of these jurisdictions are properly assessed and that any major control/governance deficiencies are properly highlighted through extensive off-site assessments, full scope desktop reviews and discussions with management and other relevant stakeholders at international jurisdictions.

5. Credit risk review of all facilities of borrowers (BSD Circular No. 7 of 2003):
In cases where the credit origination and/or documentation/monitoring is not centralized or digitally accessible, and the risk review teams have to physically visit the branches/credit regions/hubs for review/verification of documentation and monitoring of loans; the banks are allowed a onetime relaxation from conducting physical verification of such documents till October 31, 2020. However, the risk review function of the bank shall devise a comprehensive action plan to perform credit reviews for such branches/regions/hubs following a risk based approach and must review documentation through desktop/ offsite approach. Besides, the risk review function shall ensure that adopting such approach does not compromise on assessing the health and quality of bank’s credit portfolio and all efforts shall be made to ensure that control are properly implemented and credit risks are timely identified.

6. All other instructions in the above mentioned circulars shall, however, remain unchanged.




(Muhammad Akhtar Javed)

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