SBP issues new regulatory framework for exchange companies

The State Bank of Pakistan has issued a new regulatory framework for exchange companies, effective from January 1, 2025, ARY News reported.

According to reports, under this framework, exchange companies are required to adjust their policies and systems in accordance with the new regulations by June 30, 2025.

The minimum paid-up capital for exchange companies has been increased to Rs. 1 billion. Full implementation of this paid-up capital requirement is expected by 2027. By December 2025, exchange companies must ensure their paid-up capital reaches Rs. 600 million, and by December 2026, it should be Rs. 800 million.

Furthermore, exchange companies are required to maintain 15 percent of their regulatory reserves as cash security with the State Bank. Exchange company shareholders and directors must seek State Bank approval before withdrawing company funds or taking loans.

State Bank has also mandated that exchange companies can only use financing for vehicle-related loans. Exchange companies must report their returns, regulatory reserves, and documents to the State Bank for framework compliance.

The new framework is designed to increase transparency within exchange companies and is aimed at strengthening investor confidence, according to the State Bank.

Earlier, the State Bank of Pakistan launched a new version of the Electronic Credit Information Bureau (eCIB) system V2 in Karachi.

According to reports, the new eCIB system, will be operational from January 1, 2025. The newly introduced V2 aligns with technological advancements and reporting standards.

It introduces several updates and amendments to credit information reports.

What is eCIB?

The Credit Information Bureau (CIB) of the State Bank of Pakistan, established in 1992 under Section 25(A) of the Banking Companies Ordinance-1962, plays a crucial role in credit risk management and promoting a sound credit culture within the financial system.

Initially, CIB’s activities were focused on collecting and organizing data of borrowers with loans of Rs. 500,000 and above on a quarterly basis. However, the system evolved significantly with the introduction of eCIB online facilities in 2003, making CIB the first in the region to offer such services.

The revamped eCIB, operational since September 2005, now incorporates a wider scope by removing the minimum reporting threshold, capturing data from more than 4 million borrowers across about 100 member institutions.

This new system uses advanced technology, including high-capacity servers, security measures, and point-to-point encryption, improving efficiency, speed, and reliability. The enhancements enable financial institutions to make informed lending decisions, assess credit risks more accurately, and expand access to credit across diverse borrower categories like SMEs, agriculture, and consumer finance sectors.

The strengthened CIB contributes to the financial stability and promotes international standards in Pakistan’s financial system.