Framework issued for banks’ recovery regime

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.