Payment Deferment/Restructuring Options and Relaxation in Provisioning
In the SBP-PBA coordination meeting held on February 21, 2023 to discuss key matters affecting the banking sector, one of the main points of discussion was the matter of relief measures to be considered in the prevalent economic scenario and business conditions.
The coordination meeting with the Governor SBP and his senior leadership team, was attended by Chairman PBA, Mr Muhammad Aurangzeb, CEO PBA, Mr Tawfiq Hussain, and other EC members. It was decided that PBA would share specific suggestions on deferment/restructuring options with SBP. Accordingly, the matter was discussed in detail by the PBA Risk Sub Committee and the Committee’s recommendations with specific suggestions on the subject for SBP’s consideration, were subsequently sent to the Deputy Governor, SBP on March 14, 2023 via email from Mr Tawfiq Hussain, CEO, PBA.
It was pointed out that banks are already substantively exposed to Credit as well as Market Risk because of;
- Rising Interest rates
- Volatility in Foreign exchange rates
- High Inflation
- Sovereign debt levels
- Deterioration in Country Ratings by ECAIs
- Impaired GDP
- Significant reduction in FCY remittances
- Expected increase in non-performing loans
PBA has suggested that taking the above points under consideration, the IFRS-9 framework may be deferred for a year. SBP’s response is awaited.
