Circulars/Notifications - Banking Supervision Department  
 BSD Circular Letter No. 6
April 30, 2001 

The Chief Executives,

All Banks

Dear Sirs,

PERSONAL GUARANTEE OF PRIVATE LIMITED COMPANY

 

 

As per clause (D) of BCD Circular No.7 dated the 31st May, 1972, no banking company shall, make advances to a private limited company without obtaining personal guarantee of the directors of such company, in addition to the normal security which the banking company may require. This is subject to the following relaxations: -

  • In the cases of foreign controlled private companies whose directors in Pakistan are merely paid directors, either the personal guarantee of the directors in Pakistan or bank guarantee from the holding company abroad may be obtained.

  • Advances made to private limited companies including foreign controlled companies resident in Pakistan against lien on foreign currency deposits held with the lending banks, would be exempt from the requirement of obtaining personal guarantee of directors of the company.

  • Advances made to private limited companies including foreign controlled companies resident in Pakistan against lien on Foreign Currency Deposits would continue to be exempted from the requirement of obtaining personal guarantee of directors of the private limited company when the Foreign Currency Deposits are replaced with Special US Dollar Bonds registered in the name of the borrower issued by converting US Dollar Deposits.

It has been decided that in case advances made to private limited companies (including foreign controlled companies incorporated in Pakistan) are fully secured by lien on Rupee deposits held with the lending banks, the requirement of obtaining personal guarantee of directors of the company may be waived by the banks at their discretion.

                 Other instruction on the subject shall, however, remain unchanged

                 Please acknowledge receipt.


Yours faithfully,
(Kazi Abdul Muktadir)
Director
       
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