PER and IRR Policy

Profit Equalization Reserve (PER) & Investment Risk Reserve (IRR) Policy


  • Profit Equalization Reserve (PER) Policy

    PER is a reserve to accommodate the pool’s abnormal yield fluctuations.

    1. PER will be maintained at the Bank’s discretion and the accumulated balance not to exceed 30 percent of Islamic Banking Fund (Equity) or as per the State Bank of Pakistan’s directives from time to time.
    2. Amount of contribution into or utilization from the reserve will be approved by ALCO.
    3. 50 percent of the reserve’s balance will be disclosed as reserve whereas remaining 50 percent will be disclosed as liability in the Bank’s balance sheet.
    4. Reserve’s funds will be invested in SLR eligible securities like Sukuk and other similar instruments etc. and profits / return earned from such investments will also be credited into the PER account whereas Mudarib / Bank’s Share should not exceed 10% from the such profit / return.


  • Investment Risk Reserve (IRR) Policy

    IRR is a reserve to accommodate the credit and market risk of financing and investments such as unusually large write offs and/or significant losses on sale of the pool’s investments or as per the Bank’s policy / State Bank of Pakistan’s directives from time to time.

    1. IRR will be maintained at the Bank’s discretion or as per the State Bank of Pakistan’s directives from time to time.
    2. Amount of contribution into or utilization from the reserve will be approved by ALCO as per its discretion.
    3. Reserve’s balance will be disclosed as liability in the Bank’s balance sheet.
    4. Reserve’s funds will be invested in SLR eligible securities like Sukuk and other similar instruments etc. and profits / return earned from such investments will also be credited into the IRR account whereas Mudarib / Bank’s Share should not exceed 10% from the such profit / return.