Glossary · Rates & Instruments
KIBOR
The benchmark interest rate at which banks in Pakistan lend to each other on a short-term basis. Published daily by the SBP and widely used as a reference rate for corporate loans, floating-rate bonds, and other financial instruments.
01—What is KIBOR?
The definition — and what it means in practice.
KIBOR (Karachi Interbank Offered Rate) is the benchmark interest rate at which banks in Pakistan lend to each other for short tenors. It is published each business day under State Bank of Pakistan (SBP) oversight and is quoted for multiple maturities. Because it reflects short-term funding conditions in the banking system, KIBOR is widely used as a reference rate to set pricing for a range of rupee-based financial contracts.
KIBOR matters to investors because it often feeds directly into the cost of borrowing for companies and the returns on certain floating-rate instruments. When a firm’s loans are priced as “KIBOR plus a spread”, changes in KIBOR can change finance costs and, over time, profitability and cash flows. It also provides context for comparing yields on money-market and government instruments with equity dividends and valuation multiples.
If a company borrows at “KIBOR + 2%”, then when KIBOR moves up or down, its loan rate moves too, changing interest expense on (say) Rs 100 of debt.
- KIBOR is a daily-published benchmark for short-term interbank lending in Pakistan.
- Many corporate loans reference KIBOR plus a contract spread (margin).
- Floating-rate bonds and other instruments may reset returns using KIBOR.
- KIBOR changes can affect company finance costs, cash flows, and valuation assumptions.
- KIBOR is a reference rate, not the exact rate every borrower receives.
02—How kibor works on the PSX
The Pakistan-specific rules, conventions, and numbers.
PSX investors commonly encounter KIBOR indirectly through listed companies’ disclosures. Loan notes in financial statements may state pricing such as “KIBOR plus a spread”, which links financing costs to movements in the benchmark. Because KIBOR is published each business day under SBP oversight, it is a standard reference for discussing short-term rupee funding conditions when reviewing results, management commentary, or debt profiles.
KIBOR is also relevant when comparing return expectations across asset classes used by Pakistani investors. For example, short-tenor government securities such as Treasury Bills (3, 6, and 12-month tenors) and longer-tenor Pakistan Investment Bonds (3–30 years) are often discussed alongside money-market rates; KIBOR provides a familiar yardstick for those comparisons. While equities trade on PSX with T+1 settlement, the rate itself is not a trading mechanism, but a pricing input.
03—Common misconceptions
Where investors most often get this wrong.
KIBOR is the interest rate set by the stock exchange.
KIBOR is a banking benchmark published under State Bank of Pakistan oversight. It is used for pricing loans and instruments, not for running PSX trading.
If KIBOR falls, all companies immediately become more profitable.
Only exposures linked to KIBOR reset with the benchmark. Some debt may be fixed-rate, hedged, or reset on specific dates, and other costs or revenues can offset the impact.
KIBOR is the exact rate every borrower pays.
Borrowers typically pay a negotiated spread over (or sometimes below) KIBOR depending on credit risk, collateral, tenor, and contract terms.
04—Using kibor on BSL
Where this term shows up across the platform — with live data.
- Read related concepts like interest rate benchmarks in our glossary.
- Use the stock screener to filter companies and then review their financial disclosures for KIBOR-linked borrowings.
- Track market-wide moves and context on the market page alongside rate-sensitive sectors.
- Explore financing concepts such as margin and borrowing on our leverage page.
05—Frequently asked questions
What investors ask about kibor on the PSX.
Frequently Asked Questions
KIBOR stands for Karachi Interbank Offered Rate. It is a benchmark rate, published each business day under State Bank of Pakistan oversight, that reflects short-term interbank lending levels and is widely used as a reference in rupee lending and financial contracts.
Many corporate facilities are priced as “KIBOR plus a spread”. The spread is agreed in the loan contract, while KIBOR is the benchmark that can change over time. As KIBOR moves, the borrower’s interest rate can reset according to the contract’s repricing schedule.
KIBOR does not change PSX trading rules or settlement. It can affect shares indirectly by influencing companies’ borrowing costs, project economics, and valuation assumptions, especially for firms with significant floating-rate debt linked to KIBOR.
They are related but not the same. The SBP policy rate is a central bank policy setting, while KIBOR is a market benchmark for interbank lending published under SBP oversight. KIBOR can move with policy and liquidity conditions, but it is not identical by definition.
You will most often see KIBOR referenced in listed companies’ financial statements and notes to the accounts, where borrowings may be described using terms such as “KIBOR plus a spread”, along with tenor and other key loan terms.
06—Related terms
Keep building the picture.
The cost of borrowing money, set by the State Bank of Pakistan through the policy rate. Rising interest rates generally weigh on equity valuations by increasing the discount rate applied to future earnings.
The actions of the State Bank of Pakistan to control money supply and interest rates. Monetary policy decisions directly influence borrowing costs, inflation, and equity market valuations.
The segment of the financial market where short-term debt instruments, such as Treasury Bills, commercial paper, and bankers' acceptances, are traded. Provides liquidity management for banks and institutions.
A short-term government debt instrument issued by the Government of Pakistan, with maturities of 3, 6, or 12 months. Sold at a discount to face value, with the return being the difference between the purchase price and the amount received at maturity. Considered one of the safest investments in Pakistan.
A long-term government debt instrument issued by the Government of Pakistan, with maturities ranging from 3 to 30 years. Pays a fixed coupon rate on a semi-annual basis and is sold through primary dealers via auctions announced by the SBP.
The income generated by an investment over a period, expressed as a percentage of the investment's cost or current market value. Dividend yield and bond yield are the most commonly referenced forms.
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