SBP mandates Banks to submit board-approved Recovery Plans by June 2026

July 30, 2025 (MLN): In a major move to bolster Pakistan's financial stability framework, the State Bank of Pakistan (SBP) has issued a regulatory directive requiring all banks to submit comprehensive Board-approved recovery plans by June 30, 2026, under a newly issued Regulatory Framework on Recovery Planning.

The directive, issued via BPRD Circular No. 02 of 2025, follows recent amendments in key financial legislations, including the Banking Companies Ordinance (BCO), 1962 and the Deposit Protection Corporation (DPC) Act, 2016, which now grant the SBP explicit legal authority to demand, review, and enforce recovery plans from banks operating in Pakistan.

The central bank noted that these recovery plans must be prepared on a group-wide basis, encompassing subsidiaries and associates where applicable, and aligned with international standards and best practices.

The plans should be based on audited financial statements as of December 31, 2025, and must be submitted to the relevant Banking Supervision Department by the end of June 2026.

Furthermore, banks are expected to revise and submit updated recovery plans by June 30 of each subsequent year, or within 15 days of any Board-approved revision prompted by material changes during the year.

The SBP emphasized that any non-compliance with these guidelines would result in strict punitive actions under the BCO, 1962.

The introduction of this recovery planning framework marks a significant step toward enhancing the resilience of Pakistan’s banking sector, ensuring that financial institutions are better equipped to navigate periods of severe stress and maintain operational continuity.

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