STATE BANK OF PAKISTAN - BANKING POLICY DEPARTMENT

BSD  Circular No . 14 of 2004
September 24, 2004  

The Presidents/ Chief Executives
All Banks/DFIs
Dear Sirs/Madam,

REVALUATION SURPLUS/DEFICIT

Please refer to BSD circular No. 10 dated 13th July, 2004 and subsequent clarification issued vide BSD Circular No.11 dated 4th August, 2004 on the above subject. On the request of Pakistan Banks Association, it has been decided to make the following amendments in the instructions issued vide above-referred circulars:

i) The “Held to Maturity” securities shall be carried at amortized cost and shall not be required to be revalued. This will, however, be subject to the condition that once a security is classified as “Held to Maturity” no subsequent reclassification/shifting to “Available for Sale” or “Held for Trading” categories will be permissible.

ii) The term “permanent diminution” used in BSD Circular No.10 dated 13th July, 2004 has been substituted with “impairment”, which shall have the same meaning as defined in the International Accounting Standards.

iii) Banks/DFIs shall complete the process of classification of their existing investment portfolio into “Held for Trading”, “Available for Sale” and “Held to Maturity” categories by 30th September, 2004. All other instructions on the subject shall remain unchanged.
Please acknowledge receipt.