Karachi, November 26, 2024 – The State Bank of Pakistan (SBP) announced updated instructions on Tuesday regarding the minimum profit rate requirement for deposits.
Referring to Circular No. 05 of 2014 (dated May 27, 2014) and BPRD Circular No. 07 of 2013 (dated September 27, 2013), the SBP clarified that the minimum profit rate requirement outlined in these circulars will no longer apply to deposits held by financial institutions, public sector enterprises, and public limited companies. These changes will take effect on January 1, 2025.
As per BPRD Circular No. 07 of 2013, the SBP had previously specified that, effective October 1, 2013, the minimum profit rate on all Pak Rupee saving deposits would be 50 basis points below the prevailing SBP Repo Rate (Interest Rate Corridor – Floor). Adjustments to this minimum rate, following any changes to the SBP Repo Rate, were to be implemented from the first day of the following month.
The updated guidelines also reaffirm that the minimum profit rate applies to the average monthly balances of all saving deposits, including both existing and new term deposits. Other instructions on the matter remain unchanged, and non-compliance will result in punitive measures under the Banking Companies Ordinance, 1962.
This revision reflects the SBP’s ongoing efforts to streamline banking regulations and promote financial sector stability. By excluding deposits from specific entities such as financial institutions and public sector enterprises, the central bank aims to better align its profit rate policies with broader economic objectives. Experts believe this move could improve operational flexibility for banks and promote more targeted deposit strategies.
Additionally, profit payments on saving deposits for Islamic banks, including their branches or windows, will continue to be governed by IBD Circular No. 03, issued on November 19, 2012. These measures collectively ensure that the evolving dynamics of Pakistan’s financial landscape are effectively addressed.
