State Bank of Pakistan

The Presidents/ CEOs,
All Banks

Dear Sirs / Madam,

Credit Ceiling of Public Sector Enterprises / Autonomous Bodies

Please refer to BPD Circular No. 40 dated 10th November, 2003 and other instructions issued from time to time regarding the captioned subject.

2. Banks are aware that outstanding credit as of 30th June each year of Public Sector Enterprises (PSEs) / Autonomous Bodies (ABs) (list of which has already been forwarded) becomes a base for operational limit of these institutions to borrow from banks. The amount allocated by the Finance Division, Government of Pakistan in respect of each PSE/AB during a new financial year also becomes part of same. Banks can, therefore, provide maximum fund based facilities to the individual PSEs/ABs to the extent of their total limits presently assigned to each bank on the basis of input received from respective PSE/AB.

3. It has been decided with immediate effect that SBP will not make bank-wise allocation of limits of PSEs/ABs, however, Finance Division will continue to approve additional limits as usual. The concerned PSEs/ABs may themselves decide and avail credit facilities from banks of their choice without seeking SBP’s approval to its bank-wise bifurcation. Banks are, however, advised to ensure that requests from PSEs / ABs for financing facilities are considered on merit and keeping in view the relevant Prudential Regulations and other instructions issued by SBP from time to time and the fact that each PSE/AB has a valid limit assigned to it by the Finance Division.

4. Banks shall, however, continue to submit monthly statement showing outstanding credit against PSEs / ABs and investment made in their shares, Bonds & TFCs alongwith total limits of each PSEs/ABs as per revised format, being forwarded herewith, within seven working days from the close of each month. Further, any breach in the total limit and/or mis-reporting/delayed reporting will continue to attract fines under the provisions of BCO, 1962. Banks / PSEs / ABs shall, therefore, develop a criteria to ensure that the borrowings by each PSE/AB does not exceed the limit earmarked by the Finance Division, on an overall basis.

Encl: As above