The State Bank of Pakistan (SBP) has announced the establishment of the Financial Institutions Resolution Department (FIRD), a specialized unit aimed at addressing challenges faced by distressed entities within the financial sector. This new department, operating under the Banking Policy & Regulations Group, underscores the SBP’s commitment to maintaining stability and resilience in Pakistan’s financial ecosystem.
The FIRD’s primary mandate is to develop and implement effective strategies for resolving issues linked to regulated financial institutions facing distress. By focusing on resolution mechanisms, the department aims to safeguard the broader financial system, ensuring minimal disruption to customers and stakeholders while enhancing trust in the sector.
To spearhead this critical initiative, the SBP has appointed Syed Jahangir Shah as the Director of FIRD. Shah brings a wealth of experience to the role and will be tasked with leading the department’s efforts to identify, assess, and address vulnerabilities within regulated entities. His leadership is expected to play a pivotal role in shaping the department’s approach to resolving financial sector challenges and fostering long-term stability.
The creation of the FIRD aligns with the SBP’s broader strategy to strengthen regulatory oversight and improve crisis management frameworks. As the financial sector continues to evolve, the introduction of a dedicated resolution department ensures that the central bank is well-equipped to address emerging risks effectively. This move also reflects international best practices, as central banks worldwide increasingly focus on resolution planning to enhance the resilience of their financial systems.
By establishing the FIRD, the SBP has taken a proactive step toward reinforcing Pakistan’s financial stability. The department’s work will not only protect depositors and investors but also contribute to sustaining economic growth by mitigating systemic risks. The SBP’s decision to prioritize resolution mechanisms highlights its commitment to fostering a robust and secure financial environment, capable of withstanding challenges in an increasingly dynamic global economy.