KARACHI: The State Bank of Pakistan (SBP) has announced a 100 percent increase in the Minimum Capital Requirement (MCR) for new and existing banks operating in Pakistan, citing rising operating costs associated with establishing and running financial institutions on a sustainable basis.
The SBP has increased the MCR for locally operating banks including Islamic banking subsidiaries of banks from Rs10 billion to Rs20 billion.
According to SBP, keeping in view the increased operating costs to establish and manage financial institutions on sustainable basis, it has been decided to enhance the MCR for new and existing banks, foreign bank branches and Development Finance Institutions (DFIs).
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Under the revised MCR requirements, Foreign Banks (FBs) operating in Pakistan through branches will be required to maintain minimum assigned capital, net of losses, of Rs5 billion if they operate up to five branches in the country.
Foreign banks operating between 6 to 50 branches in Pakistan will be required to maintain minimum assigned capital of Rs10 billion under the revised framework announced by the SBP. The SBP has also set the MCR for Development finance institutions (DFIs) at Rs10 billion under the revised regulatory framework. As per instructions, the existing banks and DFIs will be required to meet the enhances MCR by December 31, 2030.
According to SBP, the statutory reserves created in line with Section 21 of Banking Companies Ordinance 1962 will be eligible for inclusion in MCR, in addition to the already prescribed items as per BPRD Circular No. 06 of 2013. The statutory reserves accounted towards MCR will not be withdrawn without prior approval of SBP, the circular issued by SBP said.
According to a research note by Arif Habib Limited (AHL) the revised framework also allows statutory reserves maintained under Section 21 of the Banking Companies Ordinance, 1962, to be counted towards meeting the minimum capital requirement.
AHL Research estimates that its covered listed banks will retain substantial capital buffers, averaging around Rs50 billion, and does not expect any material change in dividend payouts.
However, the revised requirements could increase capital needs for new entrants, particularly smaller banks, which may have limited accumulated statutory reserves.
Copyright Business Recorder, 2026
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