Karachi July 6 2022: State Bank of Pakistan decided to extend the implementation date of IFRS 9 by a year from January 01, 2022.
In line with international best practices, State Bank of Pakistan (SBP) has finalized the instructions on IFRS 9 (Application Instructions) for ensuring smooth and consistent implementation of the Standard in the banks/DFIs/MFBs (hereinafter referred as Financial Institutions-FIs).
Now the effective date of implementation of IFRS 9 is January 1, 2023 for banks having asset size of PKR 500 billion or above as per their Annual Financial Statements of December 31, 2021. The same implementation date is applicable for all Development Finance Intuitions (DFIs).
However, effective date of implementation of IFRS 9 is January 1, 2024 for all other banks and Microfinance Banks (MFBs).
Nevertheless, early adoption of the Standard is permissible.
During the transition period, the FIs are required to carry out the parallel run reporting. Submission of IFRS 9 pro-forma Annual Financial Statement(s) for year ending 2022 within four months of the year end.
Submission of IFRS 9 pro-forma Quarterly and Half-yearly Financial Statements for year 2022 and 2023 within two months of end of respective period.
The Financial Institutions (FIs) are required to prepare their financial statements in accordance with approved accounting standards as applicable in Pakistan. The application of new accounting requirements under IFRS 9 obliges FIs to establish provisions for expected credit losses, which requires banking industry to develop and establish new systems and models to evaluate financial assets and calculate ECL accordingly.
