Prudential Regulations have been issued by State Bank of Pakistan to put in place a prudent regulatory framework for ensuring safety and soundness of the financial system besides protecting the interests of users of financial services
The Banks/DFIs shall ensure that the araisal standard are not compromised in sch case and market rated are used for these persons. The facilities extended to the employees of the banks/DFIs as a part of their compensation package under Employees Service Rules shall not fall in this category.
Utilization of clean loan for Initial Public Offerings
At the time of sanction of a claean consumer loan/credit line , the bank/DFIs should be obtain an undertaking from the client, that the drawings from the loan account will not be used for subscription in an IPO.
The bank/DFIs should introduce an internal system. whereby no cheque,draft or payment instruction will be made for an IPO subscription account from a clean personal loan/ credit line account
Limit On Exposure Against total Consumer Financing
Banks/DFIs shall ensure that the aggregate exposure under all consumer financing facilities at the end of 1 st year of the start of their consumer financing does not exceed 2 times and 4 times of their equity respectively
Percentage of classified Consumer Financing to total consumer financing Maximum Limits a) Below 3% B )Below 5% c) Below 10% d) Below and avove 10% 10 times of the equity 6 times of the equity 4 times of the equity 2 times of the equity
Total Financing Facilities To Be Commensurate With The Income
Extending financing facilities to their customers the banks DFIs shoulf be ensure that the total installemenet of the loans extended by the financial istitute is commensurate with the monthly income and repayement capacity fo the borrower.
This measure will be helpful to bank/DFIs the borrower evaluations oif credit worthiniess to ensure the banks portfolio under consumer finance fulfill the prudential regulation issued by the SBP
The bank/DFIs shall maintain a general reserve at least equivalent to 1.5% of the consumer portfolio which is fullu secured and 5% of the consumer portfolio which is unsecured to protect them the risk associated with the economic cyclical nature of the business
Not transfer Loan From One Category to Another Category
The Bank/DFIs Shall not transfer any loan or facility to be classified, from one category of consumer finance to another, to avoid classification.