The Chief Executive Officers
All Banks/DFIs

Dear Sirs / Madam,

AGGREGATE CLEAN EXPOSURE

Please refer to Regulation R-4 of Prudential Regulations for Corporate/ Commercial Banking on Clean Exposure, and BPD’s Circular Letter No.35 of 2005, that require the Banks/DFIs to ensure that aggregate exposure against all their clean facilities shall not, at any point in time, exceed the amount of their equity.

2. The above instructions have been reviewed, on the suggestion of Pakistan Banks’ Association, and it has been decided to set higher limits for assuming unsecured exposure on case to case basis, taking into account the following factors:

(a) CAMEL rating of the bank/DFI.
(b) Quality of unsecured portfolio in terms of percentage of classified advances and write-offs/charge-offs.
(c) Past track record of dealing in the relevant clean products.

3. The banks/DFIs, who wish to take clean exposure in excess of their equity level, will be required to obtain prior approval from State Bank of Pakistan; and their requests will be processed in the light of the above criteria.

4. All other instructions on the subject will, however, remain unchanged.

5. Please acknowledge receipt.