SBP Caps Bank Investment in a Single Startup at Rs 500 Million
SBP has capped a bank’s investment in any single startup at 5% of Tier-I capital or Rs 500 million. Full limits, conditions and what it means for startups.
The State Bank of Pakistan (SBP) has capped how much a bank can invest in any single startup, including fintech startups, at 5% of the bank’s Tier-I capital or Rs 500 million, whichever is lower. The rule comes in BPRD Circular Letter No. 22 of 2026, issued on 23 October 2026 to all banks and development finance institutions (DFIs), amending Regulation R-6 of the Prudential Regulations for Corporate/Commercial Banking.
New investment limits at a glance
| Investment in a single… | Limit (lower of) |
|---|---|
| Startup (including fintech) | 5% of the bank’s Tier-I capital or Rs 500 million |
| Company (shares) | 5% of Tier-I capital or 10% of the company’s paid-up shares |
| Mutual fund, REIT or private equity fund (units) | 5% of Tier-I capital or 20% of that fund’s units |
Tier-I capital is taken from the bank’s preceding half-yearly reviewed or annual audited financial statements. Source: SBP BPRD Circular Letter No. 22 of 2026.
What else the circular says
- Every bank and DFI must have an approved equity investment policy with an internal evaluation process.
- That process must consider the bank’s financial standing, total investment portfolio, risk appetite and expected return, expertise, business strategy and exit strategy.
- Strategic investments and investments in all mutual funds and private equity funds count towards these limits. NIT units are excluded until NIT is privatised.
- All other existing instructions remain unchanged.
Why this matters for Pakistani startups
The circular, for the first time, names startups as a separate category in the investment rules, alongside companies and funds. For startups, this sets a clear ceiling: no single bank can put more than Rs 500 million into one startup, and smaller banks will be limited further by the 5% of Tier-I capital test. A Rs 500 million cheque is large by local standards, so the cap mainly matters for big funding rounds, where startups would need several banks or other investors. The requirement for a written policy and exit strategy also means banks will look harder at a startup’s numbers before investing.
What it means for bank customers
The limits are prudential rules: they stop a bank from putting too much of its own capital into a single risky investment, which protects depositors if that startup or fund fails.
Frequently asked questions
Does this stop banks from lending to startups?
No. The circular covers banks’ investments in shares or units (equity), not loans.
Does the limit apply to fintech startups?
Yes. The circular specifically says startups “including Fintech Startups”.
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Source: State Bank of Pakistan, BPRD Circular Letter No. 22 of 2026 (23 October 2026). Featured image: AI-generated illustration, for representation only.
