SBP Steps to increase Infrastructure Finance

The State Bank of Pakistan (SBP) in partnership with private groups has made a move to enhance infrastructure finance in the nation.

The SBP has incorporated in its corporate and commercial banking rules Infra Zamin Pakistan Limited, a commercial credit enhancing business, as a way to promote the country's infrastructure sector.

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In this context, it changed its prudential corporate and commercial bank rules to enable the involvement of the private sector in strengthening the country's infrastructure.

Paragraph 1(C) of Annexe-I of the corporate/commercial banking prudential rules will thus be amended as follows.

'85% by banks/development financial institutions, (rated at least 'A' or equivalent to a recognised rating agency) of unconditional financing guarantees taken as collateral on request must be removed,' the SBP said on a circulary.

"The same weightings are also applied in respect of guarantees of a similar nature issued from IFC, Commonwealth Development Corporation (CDC) German Investment and Development Corps mbH(DEG), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V (FMO), GuarantCo Limited, Asia Development Bank (ADB) and Infra Zamin Pakistan Limited."

It stated, however, that the beneficiary bank/DFI will promptly report to the SBP in relation to the above specified banks, developing financing institutions (DFIs) and companies whose guarantee was recognised as guarantees.

If, within 20 working days of the date of appeal of this guarantee, a bank/DFI or business granting the guarantee fails to comply with the claim, the bank regulator stated.

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