Circulars/Notifications - Banking Policy & Regulations Department  
 BPRD Circular Letter No. 18 of 2021
June 02, 2021

The Presidents/Chief Executive Officers,
All Banks/DFIs

Dear Sir/Madam,

Basel Capital Adequacy Framework: Investment in Real Estate Investment Trusts (REITs)

Please refer to Chapter 4 “Investment in the Units of Mutual Fund/ Collective Investment Scheme” of BPRD Circular No. 6 of August 15, 2013 regarding instruction for Basel III implementation in Pakistan.

2.  In this regard, based on the representation of REIT Management Companies and to facilitate the development of Housing Finance as well as Capital Market in the country, capital adequacy treatment for banks/ DFIs’ (banks) investment in Real Estate Investment Trusts (REITs) has been revised as under:

a. Considering the nature of underlying exposure of REITs, banks’ investment therein shall be categorized in the “Banking Book” instead of “Trading Book”.

b. Banks’ investment in REITs will attract a uniform risk weight of 100%. However, SBP may review this revised treatment after a period of five years based on the banks’ exposure and performance of REITs sector."

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

4.  Please acknowledge receipt.

Yours truly,

(Syed Imran Ali)
Additional Director

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