State Bank extends timelines for circulars, guidelines

KARACHI: The central bank has extended the timelines for its various circulars and guidelines’ requirements for the financial institutions; following the challenges being faced by the banking industry in meeting them due to the coronavirus pandemic, a circular said on Wednesday.

The timeline for the compliance risk management system has been extended to October 31, 2020 from March this year.

Implementation of the first external quality review of internal audit has been revised to December 31 from June 30, 2020. The timeline for the system for internal audit function has been extended to September 30, 2021 from December 31, 2020. “In case where the FI [financial institution] has already undergone an assessment before issuance of the SBP guidelines on Internal Audit Function (IAF), the next assessment would be due after 5 years of the earlier assessment,” the circular said. The banks with overseas operations are allowed a one-time waiver from performing annual internal audit and risk reviews of international jurisdictions for 2020, provided that the Board Audit Committees (BACs) of respective banks approve adoption of such measures.

Subsequently, the BAC and Chief Internal Auditor (CIA) would take all required measures to ensure that risks of these jurisdictions are properly assessed and that any major control / governance deficiencies are properly highlighted through extensive off-site assessments, full scope desktop reviews and discussions with the management and other relevant stakeholders at international jurisdictions, it said.

“In cases where the credit origination and / or documentation / monitoring is not centralised or digitally accessible, and the risk review teams have to physically visit the branches / credit regions / hubs for review / verification of documentation and monitoring of loans; the banks are allowed a onetime relaxation from conducting physical verification of such documents till October 31, 2020.”