SBP revises investment limits for banks in shares, startups and mutual funds

October 24, 2026 (MLN): The State Bank of Pakistan (SBP) has amended Regulation R-6 of its Prudential Regulations for Corporate/Commercial Banking, revising the limits on how much banks and development finance institutions (DFIs) can invest in shares, startups, mutual funds, real estate investment trusts (REITs) and private equity funds, and requiring them to have a formal policy for such investment decisions.

In BPRD Circular Letter No. 22, addressed to the presidents and chief executives of all banks and DFIs, the central bank said it had revised Paras 1(A) and 1(B)(iv) of the regulation.

The amendment builds on earlier changes made through BPRD Circular No. 06 of 2014, BPRD Circular Letter No. 07 of 2021 and BPRD Circular Letter No. 04 of 2022.

For shares of a single company, a bank or DFI’s aggregate investment must stay within the lower of two limits: 5% of its Tier-I capital, as reported in the preceding half-yearly reviewed or annual audited financial statements, or 10% of the paid-up shares of the investee company.

For investment in any single startup, including fintech startups, the limit is the lower of 5% of Tier-I capital or Rs500mn.

For units of any single mutual fund, REIT or private equity fund, the limit is the lower of 5% of Tier-I capital or 20% of the units of that fund.

Banks and DFIs are also required to have an approved policy that includes an internal evaluation process for objective analysis and assessment of their equity investment decisions.

The process must weigh factors such as the institution’s financial standing, aggregate investment portfolio, risk appetite and expected return, level of expertise, and business strategy, including exit strategy.

On aggregate limits, the SBP said exposure from strategic investment, along with investment in units of all forms of mutual funds and private equity funds, will count towards the aggregate investment limits set out in the single company and startup/fund paras. National Investment Trust (NIT) units are excluded until its privatisation.

All other instructions on the subject remain unchanged.

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