The State Bank of Pakistan has announced a revised remuneration rate on the Special Cash Reserve Account (US$) for November 2025, setting it at 3 percent. This represents a reduction from the 3.27 percent rate applied in October 2025. The update has been communicated through an official circular, reflecting the central bank’s monthly adjustment mechanism linked to global reference rates.
This rate applies specifically to deposits raised under FE-Circular 25 of 1998, which outlines requirements for foreign currency deposit schemes. Under the regulatory structure governing FE-25 deposits, banks and non-bank financial institutions must maintain reserves equal to 25 percent of their total foreign currency deposits with the State Bank of Pakistan. This reserve ratio includes 5 percent held in a non-remunerative Cash Reserve Account and 20 percent deposited in a Special Cash Reserve Account that earns remuneration.
While the Cash Reserve Account remains non-interest bearing, the Special Cash Reserve Account is remunerated monthly based on a benchmark rate mechanism established by the central bank. The current formula, referenced in DMMD Circular Letter No. 03 of 2023, determines the monthly rate using the CME one-month Term Secured Overnight Financing Rate (SOFR) from the final working day of the preceding month, minus a one percent service charge. This structure links the return on foreign currency reserves maintained by domestic financial institutions to established international funding benchmarks.
The adjustment in November’s rate reflects changes in the underlying SOFR benchmark and demonstrates the central bank’s ongoing efforts to keep remuneration aligned with global interest rate movements. As international funding markets shift, the SOFR-based method ensures that domestic institutions maintaining US dollar reserves receive returns that are consistent with prevailing global short-term dollar rates, albeit at a discounted level due to administrative and service deductions.
The Special Cash Reserve requirement serves as a liquidity and prudential buffer, ensuring that a portion of foreign currency deposits remains with the central bank for stability and regulatory assurance. This mechanism forms part of the broader reserve management framework designed to maintain currency market discipline, support financial sector resilience, and align Pakistan’s foreign currency reserve policy practices with international standards.
Banks and non-bank financial institutions operating foreign currency deposit portfolios monitor these monthly changes closely, as remuneration levels impact their reserve cost structures and foreign currency product pricing strategies. With global benchmark rates responding to macroeconomic indicators and central bank policies abroad, the domestic adjustment mechanism ensures consistent reflection of these global market forces within Pakistan’s regulated banking environment.
By sustaining the SOFR-linked approach, the State Bank of Pakistan reinforces transparency and predictability in the remuneration calculation. The November revision signals continuity in this policy framework, maintaining synchronization with international benchmarks while applying locally relevant adjustments.
The notification ensures that foreign currency reserve holders remain informed and aligned with compliance requirements for the coming month. As the global rate environment adjusts, further revisions may follow in subsequent monthly notices.
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