SBP updates pool management rules for IBIs

January 22, 2025 (MLN): The State Bank of Pakistan (SBP) has issued updated instructions for profit and loss distribution and pool management for Islamic Banking Institutions (IBIs).

In its latest Circular issued to the Presidents/Chief Executives of all Islamic banks and all conventional banks having Islamic banking branches, the SBP has revised key provisions for managing non-performing assets and investment-related losses.

The circular clarified that provisions against non-performing assets, write-offs, and losses on the sale of investments, in line with SBP regulations, must now be charged to the respective pool alongside other direct expenses.

Furthermore, any reversals of such provisions will benefit the same pool.

“The provisions created against non-performing assets as per relevant SBP regulations, write-offs and loss on sale of investments shall be charged to respective pool along with other direct expenses. In case of any reversal of the provisions expense/value in investment, the benefit shall be allocated to the same pool,” the circular reads.

All other instructions from the previously issued circulars remain unchanged. 

Islamic banks and conventional banks with Islamic branches have been instructed to comply with these updated regulations.

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