Regulatory Alerts2021-06-25
Risk Based Supervisory Framework
The State Bank of Pakistan has transitioned to a Risk Based Supervisory (RBS) framework to align its oversight of financial institutions with international best practices and address dynamic sector challenges. This framework employs a structured assessment of significant activities, inherent risks, and the quality of internal controls and governance to determine a Composite Risk Rating (CRR) for each entity. Based on this rating, the regulator applies a tiered intervention strategy—ranging from normal monitoring to mandated actions or resolution—that is proportional to the institution's size, complexity, and risk profile.
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