09 June 2023

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Prudential Regulations 8 Classification & Provisioning

Prudential Regulations PR-8 Classification & Provisions

Listen The Article Your browser does not support the audio element. [vc_empty_space height="20px"] Introduction: [vc_empty_space height="10px"] Prudential regulations play a crucial role in maintaining the stability and soundness of the banking sector. Among these regulations, Prudential Regulation PR-8 stands as a fundamental framework for the classification and provisioning of assets within banks and development financial institutions (DFIs). [vc_empty_space height="10px"] PR-8 provides guidelines and criteria for the proper assessment, classification, and provisioning of loans, investments, and other assets, ensuring accurate risk evaluation and financial reporting. [vc_empty_space height="10px"] Loans/Advances: [vc_empty_space height="10px"] a) Banks/DFIs must follow the prudential guidelines outlined in Annexure-V when classifying their asset portfolio and making provisions based on time criteria. [vc_empty_space...

29 May 2023

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Prudential Regulations Banks – Guarantees

Posted by Ali Murtaza

in All Articles, State Bank Regulations

[vc_empty_space height="20px"] Introduction: [vc_empty_space height="10px"] The prudential regulations R-7 issued by the State Bank of Pakistan (SBP) play a crucial role in governing the issuance of banks and Development Financial Institutions (DFIs) guarantees. [vc_empty_space height="10px"] These regulations provide a framework for ensuring the soundness, security, and proper risk management associated with guarantees, performance bonds, and counter-guarantees. [vc_empty_space height="10px"] By establishing guidelines on collateral, rating requirements, evaluation procedures, and reporting obligations, the SBP aims to safeguard the interests of all stakeholders involved in guarantee transactions. [vc_empty_space height="10px"] The prudential regulations R-7 serve as a cornerstone for promoting transparency, reliability, and confidence in the guarantee mechanisms within the financial sector, ultimately...

25 May 2023

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Prudential Regulations Banks – Part III

Posted by Ali Murtaza

in All Articles, State Bank Regulations

[vc_empty_space height="20px"] Introduction: [vc_empty_space height="10px"] Prudential Regulations play a crucial role in regulating and ensuring the stability of commercial banks in Pakistan. These regulations, set forth by the State Bank of Pakistan, establish guidelines and standards for various aspects of banking operations, including risk management, exposure limits, financial analysis, and security requirements. Adhering to these regulations is vital for banks to maintain a sound and secure financial system. [vc_empty_space height="10px"] In this article, we will explore the key provisions of the Prudential Regulations imposed by the State Bank of Pakistan on commercial banks, highlighting Monitoring of collaterals , joint inspection of pledge stock and exposure...

19 May 2023

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Prudential Regulations Banks – Part II

Posted by Ali Murtaza

in All Articles, State Bank Regulations

Prudential Regulations Commercial Banks – Part II

[vc_empty_space height="20px"] Introduction: [vc_empty_space height="10px"] Prudential Regulations play a crucial role in regulating and ensuring the stability of commercial banks in Pakistan. These regulations, set forth by the State Bank of Pakistan, establish guidelines and standards for various aspects of banking operations, including risk management, exposure limits, financial analysis, and security requirements. Adhering to these regulations is vital for banks to maintain a sound and secure financial system. [vc_empty_space height="10px"] In this article, we will explore the key provisions of the Prudential Regulations imposed by the State Bank of Pakistan on commercial banks, highlighting their significance and impact on the banking industry. Stay tuned to...

11 May 2023

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Prudential Regulations Banks – Part I

Posted by Ali Murtaza

in All Articles, State Bank Regulations

[vc_empty_space height="20px"] Introduction: Prudential Regulations play a crucial role in ensuring the stability and soundness of commercial banks operating in Pakistan. These regulations, issued by the State Bank of Pakistan (SBP), provide a comprehensive framework for risk management, capital adequacy, exposure limits, and other important aspects of banking operations. By implementing these regulations, the SBP aims to safeguard the interests of depositors, maintain financial stability, and promote a healthy banking sector in the country. This article explores the key highlights of the Prudential Regulations for commercial banks as set forth by the State Bank of Pakistan. Regulation – R-1 Exposure Limits [vc_empty_space...

29 January 2023

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Prudential Regulations Microfinance Banks

Posted by Ali Murtaza

in All Articles, State Bank Regulations

Introduction: In Pakistan, Microfinance Banks (MFBs) play a crucial role in providing financial services to the unbanked and underserved segments of the population. To ensure the stability and sustainability of these institutions, the State Bank of Pakistan (SBP) has implemented a comprehensive set of prudential regulations. These regulations aim to promote the safety and soundness of MFBs while also ensuring that they are able to fulfill their social objectives. In this article, we will provide a summary of the key prudential regulations that Microfinance Banks in Pakistan are required to comply with. Prudential Regulation R-1 Minimum Capital Requirement: MFBs shall maintain a minimum paid up...

29 January 2023

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Prudential Regulation Consumer Financing 1/2

Posted by Ali Murtaza

in All Articles, State Bank Regulations

[vc_empty_space height="20px"] Summary of Prudential Regulation Consumer Financing [vc_empty_space height="10px"] We have compiled summary of prudential regulation for consumer financing. Consumer financing has three main categories which are defined below; [vc_empty_space height="10px"] School Supplies [vc_empty_space height="20px"] Categories of Consumer Financing: [vc_empty_space height="10px"] Credit Cards Cards which allow a customer to make payments on credit. These cards include supplementary cards. Corporate cards are not included in consumer financing. [vc_empty_space height="10px"] Auto Loans This loan includes loan or financing facilities for purchase of personal vehicle. [vc_empty_space height="10px"] Personal Loans This loan includes payment to individuals for payment of goods, services and expenses including running finances. [vc_empty_space height="10px"] Electronics [vc_empty_space height="20px"] Prudential Regulation Consumer R-1: Consumer Financing to Directors, Major Shareholders, Employees. [vc_empty_space height="10px"] Consumer...

22 January 2023

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Prudential Regulations Consumer 2/2

Posted by Ali Murtaza

in All Articles, State Bank Regulations

Prudential Regulations Consumer [vc_empty_space height="10px"] We have compiled a summary of prudential regulations for consumer financing in this 2nd part. Additionally, separate regulations for credit cards, auto loans, and personal loans are as follows: [vc_empty_space height="20px"] Prudential Regulations Consumer - Credit Card [vc_empty_space height="10px"] Prudential Regulation Consumer O-1 [vc_empty_space height="10px"] The banks should take reasonable steps to satisfy themselves that cardholders have received the card and advise them to keep the card safe and PIN secret. [vc_empty_space height="10px"] Prudential Regulation Consumer O-2 [vc_empty_space height="10px"] After cardholders served a notice that card is lost or stolen, banks shall be held liable for all the transactions held after said notice. [vc_empty_space height="10px"] However banks shall be liable for...