SBP Raises Minimum Capital Requirement for Banks to Rs. 20 Billion

The State Bank of Pakistan has lifted the minimum capital floor for locally incorporated banks to Rs. 20 billion, with new deadlines for existing banks and DFIs.

NationPulse Desk

Oct 29, 2026 · 8:55 AM 1 min read

Key takeaways

SBP increased the minimum capital for locally incorporated banks to Rs. 20 billion.

Existing banks and DFIs must meet the new thresholds by December 31, 2030.

Foreign bank branches need at least Rs. 5 billion (up to 5 branches) or Rs. 10 billion (6-50 branches).

DFIs are required to hold a minimum capital of Rs. 10 billion.

Statutory reserves under Section 21 can be included in the capital requirement but cannot be withdrawn without SBP approval.

The State Bank of Pakistan (SBP) has lifted the minimum capital floor for locally incorporated banks to Rs. 20 billion, ordering current banks and development finance institutions (DFIs) to comply by December 31, 2030.

In a circular released on Wednesday, the central bank indicated the rise applies to new and existing banks, foreign bank branches and DFIs, pointing to higher operating costs of setting up and sustainably running financial institutions.

Under the new rules, locally incorporated banks, including Islamic banking subsidiaries, must keep at least Rs. 20 billion in capital.

Foreign banks with branches in Pakistan will need assigned capital, net of losses, of a minimum Rs. 5 billion if they run up to five branches, and at least Rs. 10 billion if they have between six and 50 branches.

The minimum capital threshold for DFIs is set at Rs. 10 billion.

Statutory reserves included in capital requirement

The SBP noted that statutory reserves created under Section 21 of the Banking Companies Ordinance, 1962, can be counted toward the minimum capital requirement, alongside items already specified in its 2013 regulations.

Nevertheless, statutory reserves used for this purpose cannot be withdrawn without prior approval from the central bank.

Minimum capital requirements aim to ensure financial institutions hold enough capital to absorb unexpected losses, manage bad loans and survive economic downturns.

Questions and answers