SBP amends loans regulations

The State Bank of Pakistan (SBP) has made amendments in Prudential Regulations regarding loans and advances. The SBP said here on Friday that it has decided to completely withdraw the benefit of forced sale value (FSV) against all non-performing loans (NPLs) for calculating provisioning requirement from December 31, 2007.
However, the benefit of FSV against NPLs of housing finance will be applicable as follows:

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For first year, (from the date of classification)            at 50 percent

For 2nd year, (from the date of classification)               at 50percent

3rd year and onwards, (from the date of classification)      at 50 percent

                                           (benefit of FSV not admissible)

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Similarly, SBP has amended Regulation R-8 of PR for Corporate/Commercial Banking, Regulation R-11 of PR for Small and Medium Enterprises Financing and Regulation R-22 (Housing Finance) of PR for Consumer Financing. Furthermore, the time period for classifying Personal Loans as ''loss'' has been reduced from one year to 180 days, under the amendment.
Copyright Associated Press of Pakistan, 2007