Department Overview

In alignment with international standards and best practices, the State Bank of Pakistan (SBP) is committed to strengthening its resolution framework. Guided by the recommendations from the International Monetary Fund (IMF) and World Bank, and outlined in the SBP Strategic Plan, the establishment of an independent Resolution Function is a pivotal step in ensuring financial stability. This initiative, supported by the Regulatory & Supervisory Committee and World Bank Technical Assistance, underscores SBP's proactive approach to addressing challenges in the banking sector.

Key Objectives

The Resolution Function will operate independently from supervisory functions to avoid potential conflicts. While supervision focuses on reducing the probability of bank failures, the resolution process is designed to minimize the costs and systemic impacts of such failures. The key responsibilities of this function include:

• Preparing resolution plans for systemically important banks.
• Conducting resolvability assessments and determining resolution strategies such as mergers, reconstruction, or liquidation.
• Developing policies and procedures for valuation, loss distribution, and resolution planning.
• Managing critical assessments and valuations of distressed banks to support informed decision-making.
• Executing resolutions for non-viable banks and acting as a focal point for crisis management.

Governance and Structure

The Governance Structure will include divisions dedicated to resolution policy and planning, supported by a specialized team of professionals with expertise in supervision, policy, legal affairs, and financial stability. This phased approach will enable the Resolution Function to evolve and expand its capabilities over time.