The State Bank of Pakistan (SBP) has amended capital adequacy regulations by significantly lowering the applicable risk weight (from 200% to 100%) on banks’/ development finance institutions’ (DFIs) investments in Real Estate Investment Trusts (REITs). In a statement on Wednesday, the central bank hoped that it would support the development of real estate sector. REITs are companies that raise funding from the general public and institutions and deploy these funds through investment in real estate properties. “Following the changes in capital adequacy regulations, the banks/ DFIs will now be able to increase their investments in REITs without the need to allocate relatively large amount of capital,” it said.
Published in The Express Tribune, June 3rd, 2021.