Banks allowed to issue guarantees on behalf of Pakistani firms

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SBP keeps policy rate unchanged at 7% for next two months
Karachi

The State Bank of Pakistan (SBP) on Monday allowed banks to issue guarantees on behalf of Pakistani firms and companies against the back-to-back / counter–guarantees of banks/development financial institutions (DFIs) rated at least A or equivalent by a credit rating agency on approved panel of the central bank.

The SBP amended prudential regulations for corporate and commercial banking and decided that banks/DFIs can issue guarantees on behalf of Pakistani firms and companies functioning in Pakistan against the back to back/counter-guarantees of banks/DFIs rated at least ‘A’ or equivalent by a credit rating agency on the approved panel of State Bank of Pakistan.

Besides, the counter-guarantee of bank/DFI situated in a foreign country is also acceptable if it has the rating of at least ‘A’ or equivalent on global or National Rating scale by Standard.—TLTP