Regulatory Alerts2021-06-25
Risk Based Supervisory Framework
The State Bank of Pakistan (SBP) has implemented a Risk-Based Supervisory (RBS) framework for all institutions under its regulatory purview, including banks, DFIs, and MFBs. The framework aims to maintain a sound and progressive financial services sector by focusing on key principles such as forward-looking risk assessments, judgment-based risk profiling, and proportionality in supervisory intensity. The RBS process involves identifying significant activities, assessing inherent risks, evaluating control and governance functions, and determining the overall net risk. The supervisory intervention and response are based on the assigned intervention stages, ranging from Normal to Resolution. The supervisory processes include planning, off-site analysis, on-site assessments, and updating the risk matrix based on various factors.