Circulars/Notifications / Infrastructure, Housing & SME Finance Department  

 IH&SMEFD Circular Letter No. 04 of 2017
June 16, 2017

The Presidents/Chief Executives,
All Banks/Microfinance Banks,


Credit Guarantee Scheme (CGS) for Small and Rural Enterprises

Please refer to IH&SMEFD Circular Letter No. 11 dated July 23, 2015 and IH&SMEFD Circular No. 1 dated January 13, 2017 along with other instructions issued from time to time on the captioned subject.

Under CGS sector specific approach, all the Participating Financial Institutions (PFIs) are now advised to utilize 30 percent of the allocated guarantee limit for 2017 for lending to two to three specific sectors. PFIs can select and communicate these sectors of their choice to IH&SMEFD, SBP by July 31, 2017. The sectors chosen should be specific and not broad categories like manufacturing, trade & services. Annexure A provides an illustrative list of some of these specific sectors. However, PFIs can choose any other specific sector not mentioned in the list.

In order to facilitate PFIs to target specific sectors and to align their financing products, two percent of the allocated guarantee limit will be provided as financial assistance. In this regard, PFIs will submit to SBP a proposal outlining the activities they will undertake through these funds. Annexure B lists some of the activities that may be undertaken under this financial assistance and Annexure C provides a template for proposal on fund utilization plan. These funds will be disbursed to PFIs in a phased manner. In first phase, 1% of the allocated guarantee limit will be disbursed upfront to a PFI against evaluation of the submitted proposal. Effective utilization of first installment against pre-defined activities will be used as criterion for providing the remaining 1% amount. To track the performance of PFIs against the provided funds under sector specific approach, a quarterly performance report has been prescribed. Annexure D provides a template for quarterly performance report which will be submitted by PFIs to IH&SMEFD, SBP within 15 working days of respective quarter end.

The instructions contained in this circular letter with respect to sector specific approach supersede the instructions issued vide IH&SMEFD Circular Letter No. 11 dated July 23, 2015 and IH&SMEFD Circular No. 1 dated January 13, 2017 respectively.
Other terms and conditions of Credit Guarantee Scheme shall remain unchanged.


1) Annexure A
2) Annexure B
3) Annexure C
4) Annexure D

Yours sincerely,


(Imran Ahmad)
Additional Director


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