KARACHI: The State Bank of Pakistan (SBP) has introduced a regulatory framework aimed at improving the recovery planning process of banks, in line with international standards and best practices.

In a circular issued on Thursday, the SBP said the framework outlines supervisory expectations and seeks to harmonise recovery planning across the banking industry. It forms part of broader efforts to strengthen Pakistan’s recovery and resolution regime.

Recent amendments to the Banking Companies Ordinance (BCO) 1962 and the Deposit Protection Corporation (DPC) Act 2016 have granted the SBP explicit legal powers to enforce recovery planning requirements. These include directing banks to submit recovery plans in the prescribed format, removing obstacles to implementation, and mandating revisions or updates as needed.

Banks are now required to develop and maintain comprehensive group-wide recovery plans, incorporating subsidiaries and associates where applicable. Under the new rules, all banks must submit their first recovery plans — approved by their boards of directors — by June 30, 2026, based on audited financial statements as of Dec 31, 2025.

Subsequently, banks will be required to submit board-approved recovery plans to the relevant Banking Supervision Department annually by 30th June, based on the latest audited financials. In the event of material changes during the year, revised plans must be submitted within 15 days of board approval.

Published in Dawn, Aug 1st, 2025