SBP caps bank investment in any one startup at Rs 500 million or 5% of capital

The State Bank of Pakistan has set a ceiling on how much any bank can put into a single startup: the lower of 5% of the bank's Tier-I capital or Rs 500 million (Rs 50 crore), fintech startups included. The cap comes in BPRD Circular Letter No. 22 of 2026, dated 23 October, which rewrites Regulation R-6 of the Prudential Regulations for Corporate and Commercial Banking, ProPakistani reported. It applies to every bank and development finance institution (DFI).

The three new limits

Tier-I capital (a bank's core equity and reserves) is taken from its latest half-yearly reviewed or annual audited accounts. Strategic stakes and holdings in every mutual fund and private equity fund count toward the limits. Units of the National Investment Trust (NIT) are left out until NIT is privatised. All other SBP rules on equity investment stay as they are.

What Rs 500 million means in practice

For a large bank, 5% of Tier-I capital runs into many billions of rupees, so the Rs 500 million figure is the cap that actually bites on startup deals. For a small bank or DFI with, say, Rs 6 billion of Tier-I capital, the 5% test gives Rs 300 million, and that lower figure applies instead.

Rs 500 million is about $1.8 million at today's interbank rate on our dollar rate page, which is a seed or Series A cheque by global standards and larger than most rounds raised by Pakistani startups. In other words, the rule leaves room for banks to back early-stage companies, while stopping any one bank from betting a big slice of its capital on a single young firm.

Banks must write an investment policy

Each bank and DFI now needs a board-approved equity investment policy with an internal evaluation for every deal. That evaluation has to weigh the bank's own financial position, its existing portfolio, risk appetite, expected return, in-house expertise, business strategy and an exit plan. For founders, that means a bank-backed round will now come with questions about how and when the bank expects to sell.

Why it matters

Several Pakistani banks run venture arms or have taken stakes in fintech firms, digital lenders and payment companies, and the SBP's own Regulatory Sandbox and licensing of digital banks have pulled banks closer to startups. A clear number lets banks plan such deals without case-by-case approval, while capping the risk to depositors' money.

It also lands a day before the SBP's Monetary Policy Committee meets on Monday 26 October, where a rate rise from 11.5% is widely expected: see our policy rate decision preview and the policy rate history.