July 24, 2002	Wednesday	Jamadi-ul-Awwal 13,1423

KARACHI, July 23: The State Bank has told all the banks that they can accept in lieu of a bank guarantee any corporate guarantee issued by a private foreign holding company rated ‘A’ by an international credit rating agency. But it has warned all the banks to keep on file the rating report for future review by the SBP inspectors.

In a letter issued to heads of all banks and DFIs (development financial institutions) the SBP has said that a nominee director being nominated by a creditor bank on the board of a private limited company shall be exempted from the requirement of submission of personal guarantee.

There are cases where the personal guarantees from the directors representing majority interest in a private limited company are backed by assets that are held in the name of these directors or in the name of their spouses are sufficient severally to cover the amount of financing given by a bank.

The letter says that in such cases the requirement of obtaining personal guarantees from the directors representing minority shareholding in that company may be dispensed with and need not be insisted upon.

“Evidence about the assets of the directors and/or their spouses will need not be obtained by the bank in the form of a personal wealth statement filed by such directors and/or their spouses which shall be properly placed in the record of the bank for future review by SBP inspectors.”