SBP issues debt property rules

KARACHI: The State Bank of Pakistan (SBP) on Friday issued regulations on debt property swap transactions (DPS) to minimise risks in the settlement of banks non-performing loans and also to better supervise the exposure of banking industry to the real estate sector.  

These regulations are applicable on corporate and commercial loans, consumer loans and SME loans. The central bank said the real estate assets acquired under DPS transaction will fall under the limits of 10 percent of the aggregate of banks’ advances and investments.

“Those banks, development finance institutions, which are within the prescribed limits, will follow the same, while others who have exposure higher than the limits will approach the SBP within three months with a well defined plan envisaging compliance of exposure benchmarks within a period of maximum two years,” the bank said. 

The DPS regulations are in addition to all applicable laws including Financial Institutions (Recovery of Finances) Ordinance, 2001, it added.