SBP sets Rs20 billion minimum capital for local banks by 2030

The State Bank of Pakistan has raised minimum capital requirements to Rs20 billion for locally incorporated banks and Rs10 billion for development finance institutions, requiring existing banks and DFIs to meet the thresholds by December 31, 2030. The revised rules, issued in a circular dated October 27, apply to new and existing institutions.

Foreign banks operating through branches in Pakistan are subject to assigned capital thresholds based on branch count. The requirements are at least Rs5 billion, net of losses, for banks with up to five branches, and at least Rs10 billion, net of losses, for those operating between six and 50 branches.

The SBP said the revised levels take into account the higher operating costs involved in establishing and managing financial institutions on a sustainable basis. The instructions cover locally incorporated banks, foreign bank branches and DFIs.

Statutory reserves maintained under Section 21 of the Banking Companies Ordinance, 1962, may be counted towards the minimum capital requirement alongside capital components already permitted under BPRD Circular No. 06 of 2013. Reserves counted for this purpose cannot be withdrawn without prior SBP approval. Other existing instructions on minimum capital requirements remain unchanged.