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State Bank makes amendments to prudential regulations

KARACHI: The State Bank of Pakistan (SBP) has made amendments to the prudential regulations to promote standardisation, consistency and changed some basic definitions regarding rescheduling and restricting including income recognition.

An SBP circular issued on Friday said the unrealized mark-up on loans (declassified after rescheduling or restructuring) will not be taken to income account unless at least 50 per cent of the amount is realized in cash.

However, any short recovery in this respect will not impact the declassification of this account if all other criteria (meeting the terms and conditions for at least one year and payment of at least 10pc of outstanding amount by the borrower) are met, said the SBP.

“The banks and DFIs are further directed to ensure that the status of classification, as well as provisioning, is not changed in relevant reports to the State Bank merely because a loan has been rescheduled or restructured,” said the SBP.

However, while reporting to the Credit Information Bureau (CIB) of State Bank of Pakistan, such loans and advances may be shown as ‘rescheduled or restructured’ instead of ‘overdue’.

Published in Dawn October 8th, 2016

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