The Presidents/Chief Executive Officers,

All Banks/DFIs

Dear Sir(s)/Madam,

Amendment in Regulation R-1 of Prudential Regulations for Corporate / Commercial Banking - Large Exposure Limit

1. Please refer to BPRD Circular No.06 of 2014 whereby revised Prudential Regulations (PRs) for Corporate / Commercial Banking were circulated. Following amendments in the Para 4 of regulation R-1 (Large Exposure Limit) of PRs for Corporate/Commercial Banking have been made. Accordingly, the revised Para 4 of regulation R-1 is amended as follows:
   “4. Large Exposure Limit:

i. The aggregate amount of large exposures of a bank/DFI shall not, at any point in time, exceed 50% of its total fund based and non-fund based exposure, in finance facilities and investments (excluding investment in government securities and loans secured against GoP guarantees). Large exposure shall not be applicable to investments in government securities and loans secured against GoP guarantees

ii.Banks / DFIs are advised to follow guidelines given at Para 1(a) to 1(c) of Annexure-I of PRs for Corporate / Commercial Banking, to calculate the large exposure limits.

iii. The aggregate large exposure limit of 50% will, however, not be applicable on banks operating, in Pakistan, with less than ten branches.”

2. Banks/DFIs, which are non-compliant to the amended regulation on large exposure, shall achieve the compliance thereagainst within nine months from the issuance of this circular letter. Such banks/DFIs, shall present time-bound compliance plan to Board of Directors within next three months.
3. Banks/DFIs are further advised to follow the amended regulation in letter and spirit. Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.
4. All other instructions on the matter will, however, remain unchanged.
5. Please acknowledge receipt.