The State Bank of Pakistan (SBP) has increased the aggregate exposure limit that banks and development finance institutions (DFIs) can have toward unrated large private sector borrowers from Rs3 billion to Rs10 billion, providing greater financing capacity to eligible businesses. The revised limit will take effect from September 30, 2026, according to the central bank’s latest regulatory instructions.
The State Bank of Pakistan said the decision was made after considering changes in the macroeconomic environment as well as feedback received from the banking industry. The increase represents a significant revision to the existing regulatory threshold and is intended to reflect changing conditions in the banking and credit market.
Under the revised framework, the aggregate exposure limit for an unrated large private sector borrower from all banks and development finance institutions will now stand at Rs10 billion. Previously, the combined exposure allowed under the regulatory framework was capped at Rs3 billion. The increase therefore gives banks and DFIs greater room to provide financing to large private sector borrowers that do not have an external credit rating.
The revised limit will supersede the earlier threshold established through several regulatory instructions issued by the State Bank of Pakistan over the years. These include BSD Circular No. 8 dated June 27, 2006, BPRD Circular Letter No. 2 dated January 9, 2015, and BPRD Circular No. 3 dated September 24, 2025.
The latest decision effectively updates the regulatory treatment of exposure to unrated large private sector borrowers and consolidates the higher threshold within the State Bank of Pakistan’s current credit risk framework. The change comes as the banking sector continues to operate under evolving macroeconomic conditions and regulatory requirements.
The central bank also clarified that the revised Rs10 billion exposure limit will be incorporated into the Revised Instructions for Credit Risk under the Standardized Approach of the Basel III framework. These instructions were issued through BPRD Circular No. 3 dated September 24, 2025, and are currently being implemented by banks and development finance institutions through a parallel run.
The incorporation of the new threshold into the Basel III credit risk instructions will align the revised exposure limit with the broader framework governing credit risk management within Pakistan’s banking sector. Banks and DFIs will therefore need to apply the updated limit as the revised regulatory framework moves toward implementation.
The change is particularly relevant for large private sector borrowers that do not carry formal credit ratings. Under the previous Rs3 billion aggregate limit, the amount of financing that could be extended collectively by banks and DFIs to such borrowers was more restricted. Raising the threshold to Rs10 billion provides a substantially larger financing ceiling while maintaining the regulatory framework governing credit exposure.
For banks and development finance institutions, the revised limit could provide greater flexibility when structuring credit facilities for eligible large private sector companies. The decision also reflects the State Bank of Pakistan’s response to feedback from the banking industry, suggesting that the previous limit had become less aligned with current market conditions and financing requirements.
The new limit will become effective on September 30, 2026. Until then, banks and DFIs will continue operating under the existing regulatory requirements, after which the Rs10 billion aggregate exposure threshold will replace the previous Rs3 billion limit.
The State Bank of Pakistan’s decision marks a major increase in the permitted exposure to unrated large private sector borrowers and forms part of the ongoing adjustment of the country’s banking regulations to changing economic conditions. By incorporating the revised threshold into the Basel III credit risk framework, the central bank is also ensuring that the updated treatment is reflected within the broader regulatory structure governing credit risk across banks and DFIs.
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