Investment portfolio up to 15% of equity of a bank, DFI, MFB not to be considered as core activity: State Bank of Pakistan amends outsourcing arrangements guidelines

Banking and Finance

Islamabad: State Bank of Pakistan has decided that any investment portfolio upto 15% of the equity of a bank, development finance institution (DFI), microfinance bank (MFB) will not be considered as core activity for the purpose of outsourcing arrangements under its Guidelines, a SBP circular said Friday.

SBP Guidelines on Outsourcing Arrangements prohibit Banks, DFIs, MFBs from outsourcing certain core activities, functions and processes that require effective involvement of Board of Directors and senior management on a continuous basis.

Under the Guidelines, Banks/DFIs/MFB are not allowed to outsource their core activities, functions and processes such as risk management function, internal audit function, treasury function, internal control function, compliance function and decision-making including determining compliance with Know Your Customer (KYC) requirements for opening deposit accounts & credit functions.

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