The Presidents/Chief Executive Officers,

All Banks/DFIs.

Dear Sirs / Madams,

AMENDMENT IN PARA 1 (a) OF REGULATION R-4 OF PRUDENTIAL REGULATIONS

FOR CORPORATE / COMMERCIAL BANKING

Please refer to BPRD Circular No. 06 of 2014, whereby, revised Prudential Regulations (PRs) for Corporate / Commercial Banking were issued.

2. It has been decided to revise the Para 1 (a) of the Regulation R-4 of PRs for Corporate / Commercial Banking as under:-

“1. Security Requirements

(a) All exposures shall be adequately secured. However, banks/DFIs, in aggregate, may provide clean financing facility in any form up to Rs2,000,000/- (Rupees two million only) to any single obligor. Financing facilities granted without securities, including those granted against personal guarantees, shall be deemed as ‘clean’ for the purpose of this regulation, except:

financing facilities extended against the security of guarantee of Government of Pakistan (GoP); wherein, the guarantee is in process of issuance, on account of, completion of administrative requirements & codal formalities; and the Finance Division, GoP, for the interim period, has issued a ‘Letter of Comfort (LoC)’. In such cases, the bank/DFI shall ensure that:

the guarantee of the GoP is issued within a maximum period of ninety days from the date of disbursement of financing facility;

the LoC is issued in the form and substance acceptable to it, and legally protects the interests of the bank/DFI;

the financing facility remains in conformity with other laws and regulations; and

the prospective guarantee of GoP is within the limits enshrined under relevant provisions of applicable laws / rules and has been approved by the competent authority.

Further, at the time of granting a clean facility, banks/DFIs shall obtain a written declaration to the effect that the borrower has not availed of such facilities from other banks/DFIs so as to exceed the prescribed limit of Rs. 2,000,000/- in aggregate.”

3. Banks/DFIs are further advised to follow the amended regulation in letter and spirit. Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.
4. All other instructions on the subject shall, however, remain unchanged.
5. Please acknowledge receipt.