In terms of BCD Circular No. 5 of 1983, it was, interalia, directed
that all guarantees issued by banks must contain specific amount
and expiry date
and a date by which claims are to be lodged. Banks are presently
allowed by the State Bank to issue open ended guarantees on
case by case
basis, provided such guarantees are fully secured by cash collateral.
With
a view to facilitate the banks to issue such guarantees in
situations where it is an integral part of the business, it
has been decided to allow
banks to issue open ended guarantees without clearance from
the State Bank, provided banks have fully secured their interest
by cash collateral or
other liquid securities against issuance of such guarantees
for the following purposes:-
Advance
payments/bid bond guarantees- guarantees against performance
of ongoing Government, Semi
Government & Autonomous Bodies Contracts.
Guarantees
requested by public utility companies such as gas, electricity
etc. in respect of their
customers to cover the utility supplied during the period
of guarantee.
Court
Guarantees.
Customs/Shipping
guarantees
Revenue
related Government Departments’ guarantees.
Banks
may continue to seek prior approval of State Bank of Pakistan
for issuance of open ended guarantees for purposes other than
the ones
mentioned above, on case by case basis.
Please
acknowledge receipt.
|