State Bank of Pakistan doubles minimum capital requirement for banks

New rules raise capital buffers

Local banks and their Islamic subsidiaries must now hold Rs20 billion in assigned capital. Foreign bank branches with up to five locations need Rs5 billion, while those with six to fifty branches require Rs10 billion. Development finance institutions will also maintain a minimum of Rs10 billion under the new framework.

Deadline set for compliance

Existing financial institutions and development finance bodies must meet these enhanced standards by December 31, 2030. The central bank cited higher operating costs as the reason for this regulatory shift. Statutory reserves created under specific banking laws will count toward these new capital requirements.

Capital acts as a cushion

This requirement forces institutions to keep a strong buffer against bad loans or economic downturns. The move aims to protect depositors and maintain trust in the banking system during unexpected shocks.