Please refer to BCD Circular No. 15 dated August 29, 1992 as amended from time to time.

The following amendments are made in the existing Prudential Regulations with immediate effect:-

PRUDENTIAL REGULATION-II
Para-1 of the above regulation may be replaced as under:-
1. Contingent Liabilities of a bank shall not exceed at any point of time 10 times of its paid up capital and general reserves (free of losses). In case of branches of foreign banks operating in Pakistan, capital will mean capital maintained under Section 13(3) of the Banking Companies Ordinance, 1962. Following shall not constitute contingent liabilities for the purpose of this regulation:-
a) Bills for collection.
b) Forward foreign exchange contract, weight age of 50% shall be given to bid/mobilization advance/performance bonds.
c) Obligations under Letters of Credit and Letters of Guarantee to the extent cash margin retained by the bank, and;
d) Letters of Credit/Guarantee issued on behalf of the Federal/provincial Government and established through State Bank of Pakistan provided payment is guaranteed.

PRUDENTIAL REGULATION-III
The following new Para may be added after the word “clean facilities granted to finance the export of commodities eligible under Export Finance Scheme shall be exempt from the per party limit on clean facilities”:-
Financing covered by export Credit Guarantee Insurance Scheme may also be excluded from per party limit of Rs. 100,000/- on clean facilities.

PRUDENTIAL REGULATION-IV
Para 3 (a) of Regulation-IV may be substituted by the following:-
3(a) Banks shall strictly observe the regulation when sanctioning fresh/additional credit facilities. Following relaxation is hereby granted upto 30-06-1999 for renewing existing facilities:-
Total accommodation availed by a borrower from banks/financial institutions may exceed 10 times of the capital and reserves (free of losses) of the borrower provided the borrower injects additional equity during the extended period.

PRUDENTIAL REGULATION-V
The above regulation may be substituted by the following:-
Banks shall ensure that:-
(a) Current asset to current liability ration of the borrower does not fall below the minimum indicated hereunder:-
i) upto 30-06-1998 0.9 : 1
ii) As from 30-06-1999 1 : 1
Current maturities of long term debt not yet due from payment may be excluded from the current liabilities for the purpose of calculating these ration. Lease rental receivable within the next twelve months as disclosed in the notes to the annual audited accounts shall be treated as current assets for the purpose of calculating these ratios.
b) Fresh/additional accommodation in the from of long term debts shall be provided on the basis of a debt equity ration not exceeding 60:40 provided the differential between required and e existing ration is made good during the extended period i.e. upto 30th June, 1999. Provided further that where a different debt equity ration has been laid down by the Government the ration laid down by Government shall apply.
c) Loans to individual borrowers not exceeding Rs. 500,000/- per borrower shall be exempt from the application of this regulation.

PRUDENTIAL REGULATION – X
A new Para-4 may be added at the end of regulation as under:-
4. Banks are advised to obtain clearance from the State Bank of Pakistan before fixing any charges (relating to exports) other than those mentioned in this regulation.