Rating no bar: banks can buy up to $250,000 bills from exporters

The State Bank of Pakistan on Wednesday allowed all banks/DFIs to purchase/discount bills upto $250,000 from exporters without rating restrictions. Earlier, only "A" rating banks/DFIs were allowed purchasing/discounting of bills, however on the banks'''' request the State Bank allowed purchase and discount of upto $250,000 bills from any exporter without any rating restrictions. Now any bank/DFIs having any rating can purchase short-term bills from exporters.
In addition, banks/DFIs having at least "BBB" and above rating can purchase up to $250,000 worth short-term bills from exporters. While at least "A" rating and above banks/DFIs have been allowed to buy/discount any value of bill. The SBP issued following Circular: "Please refer to the definition of ''''Exposure'''' given in Prudential Regulations for Agriculture Financing, Corporate/Commercial Banking and SMEs Financing as amended from time to time.
2. Based on the feedback received from the banks/DFIs, it has been decided to exempt the following bills purchased/discounted for the purpose of ''''Exposure'''' mentioned at Serial No (i) of the definition of ''''Exposure'''': 3. All other instructions on the subject shall, however, remain unchanged," the SBP Circular said.

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      Maturity of the bill(s)              Aggregate amount of         Minimum rating of the L/C

      purchased/discounted                 bill(s) purchased/          issuing and accepting

                                           discounted on account        banks/DFIs assigned by

                                           of one person                Standard & Poor, Moody''''s,

                                                                        Fitch-Ibca, Japan Credit

                                                                        Rating Agency (JCRA) or

                                                                        the credit rating agency

                                                                        on the approved panel of

                                                                        State Bank of Pakistan

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a)  Short term (not more than 1 year)      Up to US$250,000                        No restriction

b)  Short term (not more than 1 year)      More than US$250,000          At least "BBB" and above

c)  Long term (more than 1 year)           -Any-                           At least "A" and above

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