The
Presidents/Chief Executives
All Banks/ DFIs/NBFCs
Dear
Sirs/Madam,
GROUP
LIABILITIES IN THE CIB REPORTS
The definition of “Group”
for the purpose of CIB report as notified vide Circular
No. SBP/CIB-23/94 dated August 22, 1994 has been reviewed.
It has been decided that in the CIB report, the grouping
of borrowers shall now be done on the basis of following
criteria:
a)
The names of the “Group” companies shall be
reported by the financial institutions according to the
definition of “Group” as contained in Definition
No. 14 of the Prudential Regulations (PRs) for Corporate
/Commercial Banking. Thus, the onus for correct formation
of the group as per definition given in the Prudential Regulations
will be on Banks/DFIs/NBFCs.
b)
Banks/DFIs/NBFCs will ensure that while determining the
group relationships in terms of criteria prescribed in the
PRs, they should not consider the foreign national directors,
directors of companies under liquidation, and nominee directors
of the following entities/agencies:
· Foreign Controlled Entities.
· Banks/DFIs.
· Public Sector Enterprises.
· Federal/Provincial Government.
· Private Sector Enterprises’ nominee directors
on the Board of Public Sector Enterprises.
c)
The definition of the Group as contained in PRs shall, however,
be not applicable in the context of Government owned / controlled
entities notwithstanding the fact these are listed or unlisted.
2)
Since reflection of negative information in the credit report
of any party adversely impacts its relationships with its
lending institutions, therefore, Banks/DFIs/NBFCs are advised
to be very careful while reporting the names of group entities
in the CIB data. In case any party disputes the group relationship,
the reporting Bank/DFI/NBFC should be able to defend its
position with documentary evidence.
3)
The above changes in the grouping criteria of companies
have necessitated collection of certain additional data
from the financial institutions. Therefore, existing formats
of CIB data collection (viz. CIB-I, II and III) circulated
vide BSD Circular No.4 dated 25th February, 2003 have been
revised. The revised formats for CIB I, II and III are enclosed
as Annexure-I. Banks/DFIs/NBFCs are advised to start collecting
the additional information called for in the above formats
from their clients and form the groups as per definition
of the “Group” given in Prudential Regulations.
The SBP will start collecting the monthly CIB data on the
revised formats after revising its data capturing software
application, for which banks/DFIs/NBFCs will be advised
in due course.