The Presidents/Chief Executive Officers,

All Banks/DFIs

Dear Sir/Madam,

AMENDMENT IN ANNEXURE-I OF PRUDENTIAL REGULATIONS FOR CORPORATE/ COMMERCIAL BANKING

1. Please refer to Prudential Regulations for Corporate/ Commercial Banking and BPRD Circular Letter No. 7 of March 3, 2016 on the subject.
2. In this regard, to further facilitate the private sector’s participation for uplifting the infrastructure of Pakistan and for the development of infrastructure financing market, it has been decided to include M/s. Infra Zamin Pakistan Limited, a commercial credit enhancement facility company, in Para 1(C) of Annexure-I of Prudential Regulations for Corporate/Commercial Banking. Accordingly, Para 1(C) of Annexure-I of Prudential Regulations for Corporate/Commercial Banking is revised as under:

“85% of the unconditional financial guarantees accepted as collateral and payable on demand by banks/DFIs, (rated at least ‘A’ or equivalent by a recognized rating agency) shall be deducted. Same weightage to the guarantees of similar nature issued by the International Finance Corporation (IFC), Commonwealth Development Corporation (CDC), Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V (FMO), GuarantCo Limited, Asian Development Bank (ADB) and Infra Zamin Pakistan Limited shall also apply”.

However, in respect of above-mentioned banks, DFIs and entities whose guarantee has been accepted as collateral, the beneficiary bank/DFI shall immediately report to SBP:

1. Any instance where the guarantee issuing bank/DFI or entity fails to honor the claim within 20 working days of the date on which the guarantee is invoked;
2. Any downgrade in the rating of guarantee issuing bank/DFI or entity below ‘A’.

3. All other instructions on the matter will, however, remain unchanged.