SBP raises minimum capital requirement for banks to Rs20 billion
KARACHI (Staff Report): The State Bank of Pakistan (SBP) has increased the minimum capital requirement (MCR) for locally incorporated banks to Rs20 billion, while setting higher capital requirements for foreign banks operating in Pakistan and development finance institutions (DFIs).
According to a circular issued on October 27, 2026, the revised requirements aim to address rising operating costs associated with establishing and managing financial institutions on a sustainable basis.
Under the new requirements, all locally incorporated banks, including Islamic banking subsidiaries of banks, will be required to maintain a minimum capital of Rs20 billion.
Foreign banks operating through branches in Pakistan will face capital requirements based on the number of branches they operate. Foreign banks with up to five branches will be required to maintain assigned capital, net of losses, of at least Rs5 billion. Those operating between six and 50 branches will need to maintain the assigned capital of at least Rs10 billion.
The SBP has set the minimum capital requirement for development finance institutions at Rs10 billion.
Existing banks and DFIs have been given until December 31, 2030, to comply with the revised minimum capital requirements, according to the circular addressed to the presidents and chief executives of all banks and DFIs.
The central bank also clarified that statutory reserves maintained under Section 21 of the Banking Companies Ordinance, 1962, will be eligible for inclusion in the minimum capital requirement, in addition to the items already prescribed under BPRD Circular No. 06 of 2013.
However, statutory reserves counted towards the minimum capital requirement cannot be withdrawn without prior approval from the SBP.
The circular stated that all other existing instructions on the subject would remain unchanged.
The revised requirements update earlier directives issued by the SBP, including BSD Circular No. 19 dated September 5, 2008, BSD Circular No. 7 dated April 15, 2009, and BPRD Circular No. 10 dated October 17, 2014.