1. RISK MANAGEMENT

2.  The total outstanding exposure to any single person shall not exceed 30% of the bank’s.  The total outstanding exposure by a bank / DFI to any group shall not exceed 50% of equity as disclosed in the latest audited financial statements.

3. Contingent liabilities of a bank / DFI shall not exceed at any point in time 10 times of its equity. Following shall not constitute contingent liabilities for the purpose of this regulation:

4.  While considering proposals for any exposure (including renewal, enhancement and Rescheduling / restructuring) exceeding such (presently at Rs 500,000), banks / DFIs should give due weight age to the credit report relating to the borrower and his group obtained from Credit Information Bureau (CIB) of State Bank of Pakistan.  Banks / DFIs shall not approve and / or provide any exposure (including renewal, enhancement and rescheduling / restructuring) until and unless the Loan is accompanied by basic fact sheet.  And the audited Financial statements.

5.  Banks / DFIs shall not provide unsecured / clean financing facility in any form of a sum exceeding Rs. 500,000/- to any one person.  Financing facilities granted without securities shall be deemed as ‘clean  Banks / DFIs shall ensure that the aggregate exposure against all their clean facilities shall not, at any point in time, exceed the amount of their equity. However limit may exceed in case of subordinated loans.

6.  The total exposure (fund-based and Or non-fund based) availed by any borrower from financial institutions does not exceed 10 times of borrower’s equity  Current assets to current liabilities ratio of the borrower shall not be lower than 1:1. However, in exceptional cases, banks may go for 0.65:1.

8.  All guarantees issued by the banks / DFIs shall be fully secured, except in the cases mentioned by the state bank. Where it’s at discretion of banks.  The requirement of security can also be waived by the banks. In case of Pak comp  The guarantees shall be for a specific amount and expiry date and shall contain claim lodgments date.

9.  Banks / DFIs shall observe the prudential guidelines  The banks shall follow the time criteria and also subjective evaluation of performing and non-performing credit portfolio on the basis of credit worthiness  Banks / DFIs shall classify their loans / advances portfolio and make provisions in accordance with the criteria.

12.  Banks / DFIs shall not pay any dividend on their shares unless and until:  They meet the minimum capital requirements as  All their classified assets have been fully and duly provided for  All the requirements laid down in Banking Companies Ordinance, 1962 relating to payment of dividend are fully complied

13.  Banks / DFIs are free to determine the margin requirements on facilities provided by them to their clients.  Banks / DFIs will continue to observe margin restrictions on shares