The State Bank of Pakistan (SBP) has revised the maximum limit of equity of a bank or development finance institution (DFI) for issuing guarantee against the back-to-back/ counter-guarantee by a foreign unrated, or under-rated bank or DFI. Following the revision, the limit has risen to 10%. Through a circular issued by the Banking Policy and Regulations Department (BPRD) on Monday, the central bank has revised Para 2 of Regulation R-7 of Prudential Regulations for corporate/ commercial banking. The SBP amended conditions and limits for banks or DFIs for issuing guarantee against the back-to-back/ counter-guarantee of an unrated or rated below ‘A’ bank/DFI that is situated in a foreign country.
Published in The Express Tribune, May 25th, 2021.