SBP issues regulations for Debt Property Swap

KARACHI: State Bank of Pakistan (SBP) will introduce a separate set of regulations on debt property swap so as to better supervise the exposure of banking industry to real estate sector i.e. Regulations for Debt Property Swap (DPS).


According to a press release by SBP, the Regulations are meant to set minimum standards for DPS transactions and minimize risks in the settlement of non-performing loans (NPLs). The DPS Regulations are effective from the date of issuance and transactions in-process shall also be concluded as per these regulations, where applicable.

“The banks/DFIs lacking appropriate systems and procedures to ensure full compliance with these regulations are being given a time period of three months, from the issuance of the instructions, to streamline and/or develop the required systems and procedures”, the release read.

The release also stated that those banks/DFIs, which are within the prescribed limits, shall follow the same; while others who have exposure higher than the limits shall approach the State Bank of Pakistan within three months with a well defined plan envisaging compliance of exposure benchmarks within a period of maximum two years.

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