Please
refer to BSD Circular No. 06 dated October 28, 2005 on
the above subject.
2. In order to further strengthen the solvency of individual
bank/DFI, it has been decided to raise the Minimum Capital
Requirements (MCR) as well as Capital Adequacy Ratio (CAR)
calculated as per Basel II, as under:
i)
The minimum Paid up Capital requirements for all locally
incorporated banks has been raised to Rs. 23 billion (net
of losses) to be achieved in a phased manner as under:
Minimum
Paid up Capital
(Net of losses) |
Dead
line by which to be
increased |
Rs
5 billion |
31-12-2008 |
Rs
6 billion |
31-12-2009 |
Rs
10 billion |
31-12-2010 |
Rs
15 billion |
31-12-2011 |
Rs
19 billion |
31-12-2012 |
Rs
23 billion |
31-12-2013 |
ii)
Branches of foreign banks operating in Pakistan (FBs)
are also required to increase their assigned capital to
Rs. 23 billion (net of losses) within the above prescribed
timelines. However, those FBs, whose Head Offices hold
Paid up capital (free of losses) of at least equivalent
to US$ 300 million and have a CAR of at least 8% or minimum
prescribed by their home regulator, whichever is higher,
will be allowed with the prior approval of the State Bank
to maintain the following MCR:
a. FBs, operating with upto 5 branches are required to
raise their assigned capital to Rs. 3 billion latest by
31st December 2010.
b. FBs operating/desirous of operating with 6 to 20 branches
are required to raise their assigned capital to Rs. 6
billion by 31st December 2010.
iii) DFIs will raise their paid up capital (free of losses)
to Rs. 5 billion by December 2008 and Rs. 6 billion by
December 2009 as presently required.
3.
In addition to the above requirements, all banks are also
required to meet specific condition(s), if any, regarding
capital requirement imposed on them under the Banking
license issued by the State Bank of Pakistan.
4. All new banks including branches of foreign banks,
licensed after the date of this Circular will be required
to meet the paid up/assigned capital requirement of Rs.
23 billion before commencement of their operations.
5. The required minimum CAR, on consolidated as well as
on standalone basis has been increased for banks/DFIs
to 10%. Those banks/DFIs whose CAR is at present less
than 10% are advised to meet the shortfall latest by 31st
December, 2008. Furthermore, all banks/DFIs are required
to maintain variable CAR as under:
i) The variable CAR will now be based on CAMELS-S Rating
assigned by the State Bank to each bank and DFI. The required
variable CAR to be maintained by each bank/DFI will be
determined as follows:
CAMELS-S |
Required
CAR effective from |
|
31.12.2008 |
31.12.2009 |
1
& 2 |
10% |
10% |
3 |
10% |
12% |
4 |
11% |
14% |
5 |
12% |
15% |
ii)
Banks/DFIs which, in the opinion of the State Bank, have
high risk profile may be asked to further increase the
required CAR by One (1) percentage point.
Those banks/DFIs whose CAR fall short from the required
ratio (determined on the basis of CAMELS-S) shall meet
the shortfall within 6 months from the assignment of the
latest rating.
6.
The required MCR and CAR can be achieved by the banks/DFIs
either by fresh capital injection or retention of profits.
The stock dividend declared after meeting all the legal
and regulatory requirements, and duly disclosed in the
annual Audited Accounts will be counted towards the required
paid up capital of the bank/DFI pending completion of
the formalities for issuance of bonus shares.
7. Any bank/DFI that fails to meet the minimum paid up
capital requirement or CAR within the stipulated period
shall render itself liable to the following actions:
i) Imposition of such restrictions on its business including
restrictions on acceptance of deposits and lending as
may be deemed fit by the State Bank.
ii) Descheduling of the bank, thereby converting it into
a non-scheduled bank.
iii) Cancellation of the banking license if the State
Bank believes that the bank is not in a position to meet
the minimum paid up capital requirement or CAR.
8. This circular supersedes the instructions issued vide
BSD Circular No. 06 dated October 28, 2005.
Please acknowledge receipt.