PAK CB Policy Lending Risk Mitigation

Published on: Jan 1, 2025

On Dec. 26, PAK CB issued framework for counterparty eligibility.

  • PAK CB issued Framework for collateral and counterparty eligibility for PAK CB monetary policy lending operations and mudarabah based financing facilities.
  • Follows PAK CB Jun. 2022 added development firms in market operations, #139943.
  • Also follows PAK CB Dec. 2021 shariah compliant liquidity facilities, see #125294.
  • Framework
  • Stipulates haircuts that PAK CB will apply on market value of government securities offered as collateral for availing financing under its monetary policy lending operations.
  • Plus, criteria for the purpose of extending financing under monetary policy lending operations, such as being a regulated entity, and financial soundness requirements.
  • Some institutions will be ineligible for participation; criteria for such institutions listed.
  • Effectiveness
  • Instructions will be applicable from Jul. 2, 2025.
Regulators
PAK CB
Entity Types
B/D; Bank
Reference
Cir DMMD 9/2024, 12/26/2024
Functions
Financial; Operations; Risk; Treasury
Countries
Pakistan
Category
State
N/A
Products
Banking; Loan; Securities
Rule Type
Final
Regions
AP
Rule Date
Dec 26, 2024
Effective Date
Jul 2, 2025
Rule ID
238685
Linked to
Reg. Last Update
Dec 26, 2024
Report Section
International