Local Banks allowed to Issue Cross Border Corporate Guarantees to their Foreign Branches or to other Foreign Commercial Banks 
Reform ID  F076 
 

Reform Description 

 Before: Foreign subsidiaries were unable to secure direct financing from banks to meet their working capital.  

After: The Authorized Dealer (Banks) have been allowed to open standby letter of credit to facilitate the offshore entity of a Pakistani firm/company for raising funds from offshore jurisdiction. 
Sector   All Sectors 
Beneficiaries  All Export related Companies/ Banking & Financial Services businesses 
Jurisdiction/Location   Federal (Entire Pakistan) 
Department  SBP 
Date of Implementation   10-02-2021 
Timeline  Last 01 Year  
 

Details 

  

Difficulty 
  • Foreign subsidiaries were unable to secure direct financing from banks to meet their working capital requirements due to not having the required collaterals. 
 

Analysis 
  • It was felt that SBP should allow local banks to issue cross border corporate guarantees to their foreign branches or to other foreign commercial banks. 
 

 

 

 

Solution  
  • Authorized Dealer (Banks) have been allowed to open standby letter of credit, within the limit of 10% of average annual export earnings of last three calendar years of the applicant, or USD 100,000 whichever is higher, to facilitate the offshore entity of the Pakistani firm/company for raising funds from offshore jurisdiction. 
Evidence   https://www.sbp.org.pk/epd/2021/FEC1-Annex-A.pdf [Sec. 13(II) A (B)] 

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