KARACHI – The State Bank of Pakistan (SBP) has decided to aid commercial banks in efforts to enhance their outreach of Islamic banking services through changing the definition of rural and underserved areas.
As a result, the SBP revised its Branch Licensing Policy (BLP) through amending BPRD Circular No 15 and notified the change to the banks through issuing BPRD Circular Letter No 08. “In order to provide incentive to commercial banks for enhancing outreach of Islamic banking services, it has been decided to enhance the scope of rural and underserved areas (RUA) definition,” the circular noted.
It noted, “Henceforth, any district having less than 10 Islamic Banking Branches (IBB) will be termed as underserved with respect to Islamic banking facilities” and added that: “Consequently, first 10 IBBs in such districts of Pakistan will fall under the BLP’s definition of RUAs.” The central bank said in each calendar year only one IBB of a particular bank would be eligible to be treated as RUA in any particular district. “This means, if some bank desires to open more than one IBBs in any particular district, then its first IBB will be treated as RUA branch and any subsequent number of branch (es) would be considered as normal branch(es),” it explained. As the SBP instructions would come into effect immediately, therefore, the State Bank has allowed the banks, which have already identified RUA locations in ABEP-2011, to approach the regulator within one month of the issuance of this circular for change or replacement of RUA locations with respect to new criteria. “All other instructions on the subject shall remain unchanged,” the circular concluded.
