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JAIBP SBP Prunential Regulations Guide

The document outlines the Prudential Regulations set by the State Bank of Pakistan for various types of financing, including corporate, consumer, SME, agriculture, and microfinance. Each category has specific applicability and references to circulars that govern the regulations, with key rules addressing exposure limits, loan caps, and borrower verification. A summary table is provided to clarify which regulations apply to different borrower types.

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2 views2 pages

JAIBP SBP Prunential Regulations Guide

The document outlines the Prudential Regulations set by the State Bank of Pakistan for various types of financing, including corporate, consumer, SME, agriculture, and microfinance. Each category has specific applicability and references to circulars that govern the regulations, with key rules addressing exposure limits, loan caps, and borrower verification. A summary table is provided to clarify which regulations apply to different borrower types.

Uploaded by

Aisha A. Khalique
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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State Bank of Pakistan - Prudential Regulations (Detailed Study Guide)

Scope & Applicability


1. Prudential Regulations for Corporate / Commercial Banking

- Applicability: For financing extended by banks/DFIs to corporate and commercial entities.

- Reference: BPD Circular No. 35 of 2003

2. Prudential Regulations for Consumer Financing

- Applicability: For loans to individuals for personal use (e.g., credit cards, auto loans).

- Reference: BSD Circular No. 7 of 2005

3. Prudential Regulations for SME Financing

- Applicability: For financing extended to Small and Medium Enterprises.

- Reference: SME Circular No. 03 of 2019

4. Prudential Regulations for Agriculture Financing

- Applicability: For loans given to farmers and agribusinesses.

- Reference: AC&MFD Circular No. 03 of 2020

5. Prudential Regulations for Microfinance Banks

- Applicability: For licensed microfinance banks offering small loans to low-income individuals.

- Reference: MFD Circular No. 02 of 2014

Summary Table
Borrower Type | Applicable PRs | Reference

-------------------------|--------------------------------------|-----------------------------

Individuals | Consumer Financing | BSD Circular No. 7 of 2005


SMEs | SME Financing | SME Circular No. 03 of 2019

Corporates / Businesses | Corporate / Commercial Banking | BPD Circular No. 35 of 2003

Farmers / Agri sector | Agriculture Financing | AC&MFD Circular No. 03 of 2020

Low-income Individuals | Microfinance Banks | MFD Circular No. 02 of 2014

Simplified Breakdown of Key Regulations

Corporate / Commercial Banking

R-1: Limits on exposure to a single person or group to avoid concentration risk.

R-2: Prohibits banks from granting unsecured financing to directors and related parties.

R-3: Exposure to related parties must be on arm's length and reported separately.

Consumer Financing

R-1: Maximum loan limits for individuals, especially for personal and credit card loans.

R-2: Debt Burden Ratio (DBR) cap - monthly debt payments not to exceed 50% of net income.

R-3: Verification of income and credit history is mandatory.

SME Financing

R-1: Simplified exposure limits for SMEs compared to large corporates.

R-2: Collateral requirements may be relaxed for eligible SMEs.

R-3: Banks must develop SME-specific risk management policies.

Agriculture Financing

R-1: Credit limits must be based on per acre requirements or actual needs.

R-2: Mandatory insurance for crop or livestock loans above prescribed limits.

R-3: Loan repayment should match crop/livestock cycles.

Microfinance

R-1: Loan size limit for microloans (e.g., up to PKR 500,000).

R-2: Client should not be over-indebted or have multiple microloans.

R-3: Simple documentation and fast processing required for microloans.

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