Updated on
Summary
State Bank of Pakistan has decided to include gold ornaments and gold bullion in the definition of Liquid Assets in prudential regulations for consumer and SME financing. According to a SBP circular, State Bank has made an amendment in the definition of liquid assets, given in para 9 and 13 of prudential regulations for consumer and SMEs financing respectively. The decision has been taken to facilitate and encourage the flow of bank credit to consumer and SME financing sectors as now the banks may consider gold ornaments and gold bullion as liquid assets to extend credit. This will also benefit the banks in provisioning requirements for non-performing loans secured against gold ornaments and bullion. First para of the definition has been replaced with the following : Liquid Assets are the assets which are readily convertible into cash without recourse to a court of law and mean encashment/realizable value of government securities, bank deposits, gold ornaments, gold bullion, certificates of deposit, shares of listed companies which are actively traded on the stock exchange, NIT Units, certificates of mutual funds, Certificates of Investment (COIs) issued by DFIs/ NBFCs rated at least A by a credit rating agency on the approved panel of State Bank of Pakistan, listed TFCs rated at least A by a credit rating agency on the approved panel of State Bank of Pakistan and certificates of asset management companies for which there is a book maker quoting daily offer and bid rates and there is active secondary market trading. These assets with appropriate margins should be in possession of the banks / DFIs with perfected lien, the circular said.
