The State Bank of Pakistan (SBP) has increased the Statutory Liquidity Requirement (SLR) for Islamic banks by five percent to 19 percent. The increase would come into effect from June 03 this year. According to SBP, the present SLR for Islamic Banks and Islamic Banking Branches is 14 percent of the total demand liabilities. This 14 percent excludes the cash reserve requirement and includes time deposits with tenors of less than one year.
The regulator took the decision under Section 36 of the SBP Act, 1956, and Section 29 of the Banking companies Ordinance, 1962, the circular said. “(The upgraded) 19 percent (excluding CRR) of total demand liabilities (including time deposits with tenors of less than one year,” said SBP circular DMMD Circular No.3 issued on Wednesday.
It said: “(The) time liabilities (including time deposits with tenor of one year and above) will not require any SLR.” With this decision, the circular said, SLR for conventional and Islamic Banks would remain the same at 19 percent.
The circular pointed out that the SLR could be maintained in the form of cash in hand, balance with the National Bank of Pakistan in current account, balance with the SBP in current account and un-encumbered approved securities as notified by the central bank from time to time. Moreover, it said, all holdings of the Government of Pakistan Ijara Sukuk would be fully counted for SLR purpose. “Holdings of ‘SBP approved’ SLR eligible ‘Public Sector’ Sukuks will also be counted up to seven percent of total time and demand liabilities for SLR purpose,” the circular concluded.