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SBP notifies amendments to consumer financing regulations

SBP notifies amendments to consumer financing regulations

KARACHI: State Bank of Pakistan (SBP) on Friday notified amendment in the Regulation R-4 of Prudential Regulations for Consumer Financing.

Following are the amendments notified by the central bank:

The term “general reserve” used in the Regulation R-4 of Prudential Regulations for Consumer Financing shall henceforth be read as “general provision”.

The Banks/DFI, subject to conditions prescribed below, can release and use the general provision maintained, in terms of Regulation R-4 of Prudential Regulations for Consumer Financing, against the secured and unsecured consumer finance portfolio:

The general provision will only be available for use to make good the specific provision requirement of the consumer financing portfolio; and,

The aforesaid treatment will expire on December 31, 2021. Thereafter, the general provision against the consumer financing portfolio will be maintained as per the method prescribed in the Regulation R-4 of Prudential Regulations for Consumer Financing prevailing on July 09, 2020.

The Banks/DFIs may, as per their own discretion and in terms of relevant internal policies, maintain the general provision against consumer financing.

The SBP said that all other instructions on the subject shall, however, remain unchanged. The Banks/DFIs are advised to follow the regulations in letter and spirit.

Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962, the SBP said.