According to a press release by SBP, the Regulations are meant to set minimum standards for DPS transactions and minimize risks in the settlement of non-performing loans (NPLs). The DPS Regulations are effective from the date of issuance and transactions in-process shall also be concluded as per these regulations, where applicable.
“The banks/DFIs lacking appropriate systems and procedures to ensure full compliance with these regulations are being given a time period of three months, from the issuance of the instructions, to streamline and/or develop the required systems and procedures”, the release read.
The release also stated that those banks/DFIs, which are within the prescribed limits, shall follow the same; while others who have exposure higher than the limits shall approach the State Bank of Pakistan within three months with a well defined plan envisaging compliance of exposure benchmarks within a period of maximum two years.
The DPS regulations are in addition to all applicable laws including Financial Institutions (Recovery of Finances) Ordinance, 2001.