Arif Habib Limited analysts expect listed banks to maintain sufficient capital buffers under the revised framework, with no material impact on dividend payouts.
Karachi, October 28, 2026: The State Bank of Pakistan (SBP) has revised its Minimum Capital Requirements (MCR) for local banks, foreign banks and development finance institutions (DFIs), giving affected institutions until December 31, 2030, to comply with the new rules.
According to an analysis by Arif Habib Limited (AHL), the SBP issued the revised requirements through a circular dated October 28, 2026.
Under the revised framework, the minimum capital requirement for locally operating banks has increased from Rs10 billion to Rs20 billion.
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Foreign banks operating in Pakistan must maintain minimum capital of Rs5 billion for branches operating up to five locations and Rs10 billion for those operating between six and 50 branches. Meanwhile, the MCR for DFIs has been set at Rs10 billion.
Statutory reserves included in eligible capital
A key change is the inclusion of statutory reserves maintained under Section 21 of the Banking Companies Ordinance, 1962, in the capital eligible for meeting the MCR.
Under the law, banks are required to allocate a prescribed portion of their after-tax profits to statutory reserves before declaring dividends.
Assessing the September 2026 closing balances of statutory reserves reported by banks covered in its analysis, AHL estimated that listed banks would retain substantial buffers against the revised capital requirements.
The brokerage estimated the average capital buffer among its covered banks at around Rs50 billion, suggesting that existing institutions are generally well positioned to meet the new requirements.
Limited impact expected on dividends
AHL analysts do not expect the revised requirements to trigger material changes in dividend payouts by listed banks, given the estimated capital buffers and the inclusion of statutory reserves in eligible capital.
However, the changes could have greater implications for prospective market entrants and smaller banks.
Newer or smaller institutions may have accumulated limited statutory reserves from previous years’ profits, potentially requiring additional capital injections to satisfy the revised requirements.
The new framework therefore raises the capital threshold for local banking operations while providing existing banks with greater flexibility through the recognition of statutory reserves.
Affected institutions have until the end of 2030 to meet the revised requirements.
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