ISLAMABAD: The State Bank of Pakistan (SBP) announced a nationwide bank holiday on January 1, 2026, to mark the start of the new year.
In a statement, the central bank said that all banks and financial institutions will remain closed for public dealings on that day. Development Finance Institutions (DFIs) and Microfinance Banks (MFBs) will also remain closed.
However, the SBP clarified that bank employees will report to duty as usual on January 1. The bank holiday is given to help banks complete year-end financial work and ensure a smooth start to the new financial year.
Meanwhile, the SBP has also announced new measures to manage climate-related risks for financial institutions, as climate change poses growing threats to Pakistan’s economy and banking system.
In a circular, the SBP said it has decided to introduce additional stress testing shocks related to climate risks to strengthen the risk management capacity of banks, DFIs, and MFBs. As part of this move, the central bank is rolling out Guidelines on Climate Stress Testing.
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The SBP noted that Pakistan is among the most climate-vulnerable countries, which exposes its financial sector to increasing physical and transition risks. The new guidelines aim to help financial institutions better understand and manage these risks.
According to the circular, the guidelines provide scenarios for climate-related single-factor shocks, covering both physical and transition risks. Sample Domestic Systemically Important Banks (D-SIBs) will now be required to include climate-related risks in their annual Macro Stress Testing (MST) exercises.
The guidelines will help financial institutions assess the impact of climate risks on their lending portfolios and financial position. These climate stress tests will be conducted in addition to existing stress testing requirements issued under an earlier SBP circular in September 2020.
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The SBP said regulated financial institutions will carry out climate stress testing based on end-December data by the second quarter of the following year. The first round of this exercise may be completed by the third quarter of calendar year 2026, using data from December 2025.
Sample D-SIBs will conduct annual stress tests based on audited financial data as of December 31 and submit the results to the SBP by June 30 of the following year.
The SBP added that it will also conduct its own climate stress testing as part of its supervisory role. If needed, it may ask banks to take risk mitigation steps or prepare contingency plans. SBP supervisory teams may also review the climate stress testing frameworks and processes of regulated financial institutions.
