In order to encourage financing activities in the economy, it has been decided to include GuarantCo Limited in Prudential Regulations for Corporate/Commercial Banking.
The SBP says 85% of the unconditional financial guarantees accepted as collateral and payable on demand by banks/DFIs, (rated at least 'A' or equivalent by a recognized rating agency) shall be deducted. Same weightage to the guarantees of similar nature issued by the International Finance Corporation (IFC), Commonwealth Development Corporation (CDC) Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V (FMO), GuarantCo Limited and Asian Development Bank (ADB) shall also apply.
However, in respect of above-mentioned banks/DFIs or entities whose guarantee has been accepted as collateral, the beneficiary bank/DFI shall immediately report to SBP
Any instance where the guarantee issuing bank/DFI or entity fails to honour the claim within 20 working days of the date on which the guarantee is invoked, GuarantCo Ltd. provides risk mitigation instruments to credit enhance local currency debt issuance by private, municipal, and parastatal infrastructure sectors in lower income countries throughout the world. It also offers funds for technical assistance to develop and structure transactions that include a contingent product provided by GuarantCo, as well as to support local capacity building and capital market development. The company is based in Mauritius. GuarantCo Ltd operates as a subsidiary of Private Infrastructure Development Group.