The Presidents/Chief Executives,
All Banks/DFls

Dear Sirs/ Madam,

REVALUATION SURPLUS / DEFICIT

Please refer to BSD Circular Letter No. 10 dated August 26, 2002 regarding Deferment of IAS-39 and 40 and BSD Circular No. 11, dated August 04, 2004 regarding Revaluation Surplus and Deficit.

2. It has been observed that some banks/DFIs are not interpreting the instructions issued vide above referred Circulars in true spirit. It is, therefore, clarified that:-

i) Investments in subsidiaries and associates shall be reported separately and shall not be mark to market, which means such investments should be carried at cost.

ii) As the implementation of IAS-39 and 40 has been deferred, therefore, banks / DFIs should not implement them for a particular segment of investments or any other category of financial asset or liability until and unless SBP issues instructions for adoption of these standards by banks / DFIs.

3. Banks/DFIs should report all adjustments of this nature to SBP for its record.

4. Any violation of instructions on the subject shall attract punitive action under the relevant provisions of the Banking Companies Ordinance 1962.

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

Please acknowledge receipt.