The State Bank of Pakistan (SBP) has slightly increased the remuneration rate on the Special Cash Reserve Account (US$) for August 2026, setting it at 2.66% compared with 2.65% in July 2026 and 2.62% in June 2026. The revised rate applies to deposits maintained under FE-Circular25 of 1998, according to the latest notification issued by the central bank.
The adjustment is part of SBP’s established mechanism for determining the return on foreign currency reserves maintained by banks and non-bank financial institutions (NBFIs). The monthly remuneration rate is calculated according to international market benchmarks and reflects changes in prevailing global interest rate conditions.
Under the existing regulatory framework, banks and NBFIs are required to maintain cash reserves equivalent to 25% of their total FE-25 deposits with the State Bank of Pakistan. These reserves are divided into two categories, including a 5% Cash Reserve Account and a 20% Special Cash Reserve Account.
The Cash Reserve Account does not provide any remuneration, while the Special Cash Reserve Account receives monthly returns based on the rate announced by SBP. The arrangement ensures that financial institutions maintain required foreign currency reserves while receiving a return on the portion held under the special reserve category.
According to the framework outlined in DMMD Circular Letter No. 03 of 2023, the remuneration rate for the Special Cash Reserve Account is determined using the CME 1-month Term Secured Overnight Financing Rate (SOFR). The benchmark rate used for calculation is the SOFR published on the last working day of the previous month, after applying a deduction of 1% as service charges.
The latest adjustment reflects SBP’s continued approach of linking foreign currency reserve remuneration with international financial market indicators. By using a globally recognised benchmark, the central bank maintains a structured process for revising the monthly return applicable to Special Cash Reserve Accounts.
Foreign currency reserve requirements play an important role in Pakistan’s banking system by supporting liquidity management and ensuring that financial institutions maintain adequate foreign currency balances. The FE-25 deposit framework governs specific foreign currency deposits and related reserve requirements maintained by banks and eligible financial institutions.
The revised remuneration rate of 2.66% will remain applicable for August 2026, with future adjustments subject to changes in the relevant international benchmark rates and the SBP’s monthly review mechanism. The central bank continues to monitor global financial conditions while maintaining regulatory measures for foreign currency deposit management within Pakistan’s financial sector.
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