Corporate/commercial banking: SBP includes credit firm in Annexure-I of PRs

KARACHI: The State Bank of Pakistan (SBP) Thursday included M/s Infra Zamin Pakistan Limited as a commercial credit enhancement facility company in Prudential Regulations for corporate/ commercial banking.

In order 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 percent 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, the Asian Development Bank (ADB) and Infra Zamin Pakistan Limited shall also apply."

However, according to the circular issued by the SBP, in respect of abovementioned banks, DFIs and entities whose guarantee has been accepted as collateral, the beneficiary bank/DFI will immediately report to the SBP:

"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 and any downgrade in the rating of guarantee issuing bank/DFI or entity below 'A'."

Copyright Business Recorder, 2021