SBP amends corporate, banking rules

KARACHI: State Bank of Pakistan (SBP) has amended its corporate and commercial banking prudential regulations to facilitate the private sector’s role in uplifting the country’s infrastructure, it said on Thursday.

The SBP has included Infra Zamin Pakistan Limited, a commercial credit enhancement facility company, in its regulations on corporate and commercial banking, in a bid to develop the infrastructure financing market in the country.

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/development finance institutions, (rated at least ‘A’ or equivalent by a recognized rating agency) shall be deducted,” the SBP said in a circular.

“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, it added that in respect of above-mentioned banks, development finance institutions (DFIs) and entities whose guarantee had been accepted as collateral, the beneficiary bank/DFI would immediately report to the SBP.

“If any instance where the guarantee issuing bank/DFI or entity fails to honour the claim within 20 working days of the date on which the guarantee is invoked,” the central bank said.