The Chief Executives,
All Banks / DFIs.

Dear Sirs/Madam,

MINIMUM RATING OF BANKS REQUIRED FOR
ACCEPTANCE OF THEIR COUNTER-GUARANTEE BY SCHEDULED BANKS IN PAKISTAN: R-7 (PARA 2)

Please refer to the Prudential Regulations issued vide BPD Circular No.35 dated 28th October, 2003.

2. It has been decided to amend R-7, Para 2 of the Prudential Regulations for Corporate/ Commercial Banking as under:

"The requirement of security can also be waived by the banks / DFIs in cases of guarantees issued to Pakistani firms and companies functioning in Pakistan against the back to back / counter guarantees of branches of guarantee issuing bank / DFI or banks / DFIs rated at least ‘A’ or equivalent by a credit rating agency on the approved panel of State Bank of Pakistan or Standard & Poor, Moody's, and Fitch-Ibca. Besides, in case the counter-guarantee issuing bank is situated in a foreign country, the rating of at least 'A' or equivalent by a local credit rating agency of the respective country shall also be acceptable, provided the guarantee issuing bank in Pakistan is comfortable with and accepts the counter-guarantee of such foreign bank.

The banks / DFIs are encouraged to set limits for acceptance of guarantees issued by other banks / DFIs."

3. All other instructions on the subject shall, however, remain unchanged.

4. Please acknowledge receipt.