KARACHI, Aug13: The State Bank of Pakistan on Wednesday issued “Guidelines on internal capital adequacy assessment process” to improve the risk profile of banks and development finance institutions (DFIs).

The banks and DFIs are required to have a process for assessing their overall capital adequacy on continuing basis in relation to their risk profile and a strategy for maintaining their capital levels.

The SBP said that in order to facilitate banks and DFIs to develop such a process, guidelines on internal capital adequacy assessment have been developed.

All banks and DFIs are required to put in place an effective process for assessing their overall capital adequacy in the light of enclosed guidelines.

They may adopt any available capital assessment methodology based on their size, nature and complexity of the operations.

“The assessment process, so adopted, should be comprehensively documented and made part of bank and DFIs’ strategic decision-making process,” said an SBP circular.

All banks and DFIs were advised to submit the major findings of ICAAP latest by April 30, 2009, to the Banking Surveillance Department.

“It is emphasised that ICAAP is an ongoing activity and submission of findings at a particular date should not be construed as a periodical exercise,” said the circular.