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SBP announces new rules for CMA operation

RECORDER REPORT

KARACHI: The State Bank of Pakistan on Wednesday announced new rules to operate the Cash Management Account (CMA) by the investment banks.

According to a circular of State Bank, all investment banks have been advised to maintain individual customer-wise records for all amounts received by it under the CMA from its customers and for all transactions entered into for them on their behalf.

All investment bank will execute proper agreements with its customers for availing of service under the CMA, the circular said.

Total outstanding amount of the CMA funds accepted by an investment bank for the first two years of its operation should not exceed seven times its equity.

In subsequent years, the outstanding CMA funds should not exceed ten times the equity of the investment bank.

The SBP has provided a detail of modes of investment for the investment banks. Terms and conditions were also identified by the State Bank.

In addition, general guidelines were also provided to carry out the CMA operation.

The following is the text of BPRD circular No. 6: