Rs20 billion capital limit set for banks

The State Bank of Pakistan has raised minimum capital requirements for locally incorporated banks, foreign bank branches and development finance institutions, Dawn reported on October 29. Local banks, including Islamic banking subsidiaries, must maintain Rs20 billion, while foreign banks need assigned capital of Rs5 billion for up to five branches or Rs10 billion for six to 50 branches. The minimum for development finance institutions is Rs10 billion.

Existing banks and development finance institutions have until December 31, 2030, to meet the new thresholds. Statutory reserves can count towards the requirement, but institutions will need prior SBP approval before withdrawing reserves included in their capital calculation. The central bank said the higher requirements reflect the costs of establishing and sustainably operating financial institutions, and are intended to support capital buffers against losses and economic shocks.