Posted by: 1pakistani | April 15, 2009

SBP slashes Minimum Capital Requirement for banks

KARACHI: The State Bank of Pakistan has massively slashed the Minimum Capital Requirement (MCR) for banks, providing breathing space, especially to small and medium size banks desperately looking for mergers or sale.

‘The banks are required to raise their minimum paid-up capital to Rs10 billion by Dec 31, 2013, instead of an earlier set limit of Rs23 billion,’ said an SBP circular issued on Wednesday.

The MCR requirement was slashed by 77 per cent which was surprising but bankers said it reflects the ‘severity’ of hard time influencing Pakistani banks.

The banks will now be required to raise their minimum paid-up capital to Rs6 billion by Dec 31, 2009, Rs7 billion by 2010, Rs8 billion by 2011, Rs9 billion by 2012 and Rs10 billion by Dec 31, 2013.

The State Bank did not change the requirement of Capital Adequacy Ratio (CAR). It said the capital adequacy standards will continue as previously and all banks and DFIs will be required to increase CAR to 10 per cent till Dec 31, 2009, ‘irrespective of their CAMELS-S rating.’

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