In order to strengthen recovery and resolution regime in Pakistan, various amendments in relevant laws i.e. Banking Companies Ordinance (BCO), 1962 and Deposit Protection Corporation (DPC) Act, 2016 have recently been enacted. The amendments, inter alia, provide explicit legal powers to State Bank of Pakistan (SBP) to require the banks to submit a recovery plan in the form, content and manner as directed by the SBP, remove any impediments to the implementation of the plan, revise and update recovery plan etc.
2. In this regard, to outline SBP’s supervisory expectations for recovery planning by banks and to harmonize recovery planning practices across the banking industry, SBP has developed a regulatory framework on recovery planning (enclosed), in line with the international standards and best practices.
3. The banks are required to develop and maintain comprehensive recovery plans on group wide basis including their subsidiaries and associates, where applicable. The banks shall develop and submit their first Recovery Plans in light of this framework, duly approved by their Board of Directors to relevant Banking Supervision Departments by June 30, 2026 based on the audited financial statements as of December 31, 2025. Subsequently, all the banks shall submit their Board approved recovery plans to relevant Supervision Department by 30th June of each year based on the latest audited financial statements or within 15 days of the Board’s approval in case of revision in the plan based on material changes during the year.
4. Any violation of these instructions shall attract strict punitive action under the relevant provisions of the BCO, 1962.
5. Please acknowledge receipt.
Enclosed: Regulatory Framework on Recovery Planning