920218
STATE BANK OF PAKISTAN BANKING CONTROL DEPARTMENT CENTRAL DIRECTORATE KARACHI
BCD Circular No. 7
18th February, 1992
All Banks
PRUDENTIAL REGULATION – XVII
Banks are directed riot to issue any guarantee or letter of comfort nor assume any obligation whatsoever in respect of deposits, sale of investment certificates, issue of commercial papers, or borrowings of any non-bank financial institution. In other words, banks shall not assume any obligation on behalf of any financial institution including investment banks, leasing companies modarabas and development finance institutions, etc. in respect of any resources mobilized by them.
2. Some of the banks are providing funds management facility (FMF) to their clients. In all such cases of fund management, banks must have a written contract with the persons on whose behalf fund management is being undertaken which agreement must, interalia, clearly state that the bank assumes no liability of any kind on account of such funds. Such funds shall not form part of bank’s time and demand liabilities.
Please acknowledge receipt.
Yours faithfully,
(R.A. Chughtai)
Director
