Purpose: Liquidity rules phased under the Basel lllshowsthat the new stable funding ratios (NSFR) increase the stability of the funding structure of the financial institution. Using a Pakistani banking data, the relevance of both Structural liquidity and Capital ratios as defined in the Basel lll is tested in this research. The broad definition of the failure and distress is used to check the status of the banking sector. If the banks fail, then it is denoted by 1 otherwise 0 and the logistic regression is used in the study. Estimate from several versions of the logistic probability model indicates that the likelihood of failure and distress decrease with increase in liquidity holding while capital ratios are not significant. Results support the Basel lll stance that the NSFR has the inverse relation with the bank failure and distress. Comparison between NSFR-10 and NSFR-14 is also done and the analysis shows that the NSFR-14 is more reliable as compared to the NSFR-10. The bank situations whether it lies in the failure and distress condition or in active banks and variables that have an important impact on the stability and failure of the banks are also discussed.