Please refer to Para 2 of Regulation R-3 of Prudential Regulations for Corporate / Commercial Banking, regarding minimum conditions for taking exposure. It has been decided to replace the above referred para as under:

1- “Banks / DFIs shall, as a matter of rule, obtain a copy of financial statements duly audited by a practicing Chartered Accountant, relating to the business of every borrower which is a limited company or where the exposure of a bank / DFI exceeds Rs 10 million, for analysis and record. The banks / DFIs may also accept a copy of financial statements duly audited/certified by a practicing Cost and Management Accountant in case of a borrower other than a public company or a private company which is a subsidiary of a public company.

However, if the borrower is a public limited company and exposure exceeds Rs. 500 million, banks/DFIs should obtain the financial statements duly audited by a firm of Chartered Accountants which has received satisfactory rating under the Quality Control Review (QCR) Program of the Institute of Chartered Accountants of Pakistan. Subsequently, if the firm’s rating is downgraded in QCR program, then the financial statements of such borrowers are audited in the subsequent year by a firm having satisfactory rating under QCR.

Banks / DFIs may waive the requirement of obtaining copy of financial statements when the exposure net of liquid assets does not exceed the limit of Rs 10 million. Further, financial statements signed by the borrower will suffice where the exposure is fully secured by liquid assets.”

2- This amendment in the regulation will be applicable after December 31, 2009. Banks / DFIs are advised to communicate the contents of this circular to all of their existing borrowers which are public limited companies and their limits are exceeding Rs. 500 million so that they will submit the financial statements in accordance with the above instructions after 31-12-2009.

3- Other instructions on the subject will remain the same.

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