Presidents/ Chief Executives,

All Banks/DFIs /MFBs,

Dear Sir/Madam,

IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARD 9 (IFRS 9)

1. Please refer to SBP, BPRD Circular Letter No. 24 dated July 05, 2021 on the captioned subject, wherein the effective date of IFRS 9 implementation and its transition requirements were advised.
2. In line with international best practices, State Bank of Pakistan (SBP) has finalized the instructions on IFRS 9 (Application Instructions) for ensuring smooth and consistent implementation of the Standard in the banks/DFIs/MFBs (hereinafter referred as Financial Institutions-FIs). The IFRS 9 Application Instructions are hereby enclosed for meticulous compliance.

Moreover, it has been decided to extend the implementation date of IFRS 9 from January 01, 2022 as per the following timelines:

1. Effective Date of Implementation - January 1, 2023: For banks having asset size of PKR 500 billion or above as per their Annual Financial Statements of December 31, 2021. The same implementation date is applicable for all Development Finance Institutions (DFIs).
2. Effective Date of Implementation - January 1, 2024: For all other banks and Microfinance Banks (MFBs).
3. Nevertheless, early adoption of the Standard is permissible.

During the transition period, the FIs are required to carry out the parallel run reporting as per following timelines.

The list of relevant instructions that will stand superseded with respective implementation of IFRS 9 are attached at Annexure A of IFRS 9 Application Instructions. Further, the Guidelines for absorption of expected credit loss for Capital Adequacy Ratio (CAR) purposes are attached at Annexure B.

Please acknowledge receipt.