KARACHI: The State Bank of Pakistan (SBP) has increased the Minimum Capital Requirements (MCR) for all local and foreign banks.
In a circular issued on Wednesday, the central bank said it had decided to raise the MCR for new and existing banks, foreign bank branches and DFIs, citing higher operating costs associated with establishing and sustainably managing financial institutions.
As per the requirements, the MCR for the locally incorporated banks, including the Islamic banking subsidiaries of banks, will be Rs20 billion.
Foreign banks (FBs) operating in Pakistan through branches will be required to maintain assigned capital, net of losses, of at least Rs5bn if they have up to five branches, and Rs10bn if they operate between six and 50 branches.
“The MCR for DFIs (Development Financial Institutions) will be Rs10bn. The existing banks and DFIs shall meet the above MCR by Dec 31, 2030,” said the circular.
The statutory reserves created under Section 21 of the Banking Companies Ordinance 1962 will be eligible for inclusion in MCR, in addition to the items already prescribed under BPRD circular no. 06 of 2013. The statutory reserves accounted for MCR shall not be withdrawn without prior approval of SBP, said SBP.
MCR forces financial institutions to keep a strong, high-quality capital buffer so they can handle bad loans or economic downturns without failing. Capital acts as a cushion to absorb unexpected financial shocks, protect depositors, and maintain trust in the banking system.
Published in Dawn, October 29th, 2026
