SECP amends credit, suretyship rules

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Monday notified amendments to credit and suretyship rules, saying the step was to promote implementation and sound and principles of risk management in businesses of insurance companies.

The amendments require insurance companies to develop risk assessment mechanism to evaluate technical and financial strength of the persons on whose behalf the bond/guarantee is being issued, the regulator said.

The move was intended to assess the principal obligors’ experience and expertise to carry on the project work, as well their financial strength, it added. Through these amendments, SECP has also reduced the cash collateral requirement to 10 percent of the bond value.

Furthermore, to optimally utilise local absorption capacity available within the country, and to curtail outflow of reinsurance cessions abroad, the regulator has delinked collateral requirements from reinsurance arrangement. The S.R.O 1010(I)/2022 covering the amendments to the Credit and Suretyship (Conduct of Business) Rules, 2018 is available on SECP's website.