Answer: The facility is for Micro Small Medium Enterprises, irrespective of the geographical location, agriculture, women empowerment, start-up, micro borrower and the person with disability. The existing portfolio of (“Participating Financial Institution”) PFI, along with the new borrowers are eligible for risk sharing facility which are meeting the criteria set out in the relevant Prudential Regulations (PRs) issued by State Bank of Pakistan (“SBP”) from time to time.
Answer: The outstanding portfolios of eligible categories, may qualify for the risk sharing facility. The risk sharing facility would be provided ranges from 50% to 90% based on the Credit Risk Rating of the PFI, determined by the PCGC based on NPL, CAMEL framework and nature of business/ collateral level etc.
Answer: PCGC and PFI will sign the Risk Sharing Agreement (“RSA”). RSA would have details pertaining to individual PFI Limit, Credit Guarantee coverage, pricing, tenure and mutually agreed terms and conditions.
Answer: The objective of the PCGC is to reduce the financing cost for the borrower; although it would be PFI decision to charge the cost of risk sharing to customer. PCGC may impose price cap for special programs.
Answer: The maximum loan limit for single borrower would be as per SBP respective Prudential Regulations. However, Tenure of guarantee cannot exceed to loan maturity tenure.
Answer: The loss under the credit guarantee facility is measured under the applicable prudential regulations and the Risk Sharing Agreement shall have all details regarding, the pricing, risk coverage ratio, the reporting expected from PFI, PCGC liability and the payment/ settlement.
Answer: The process would have following key steps:
Answer: The Risk Sharing Agreement shall have details regarding the payment and settlement procedure. Furthermore, the RSA shall be singed between PCGC & the respective PFI. Upfront annual fee will be paid in semiannual installments. In case of recovery, quarterly payment will be paid to PCGC. Payment of loss claim will be paid in two weeks’ time subject to fulfillment of SBP and PCGC requirements.
Answer: The Risk Sharing Agreement (“RSA”) shall have details regarding the on-site & off-site monitoring of the portfolio from the PCGC. The detail mechanism regarding reporting shall be embedded in the RSA. However, PFI would be expected to submit quarterly portfolio details for the monitoring of the portfolio and fresh Loans or replacement of Loans can be submitted on monthly basis on the prescribed format.
Answer: The PCGC shall charge nominal annual fee ranges from 0.25% to 1.5% of the outstanding portfolio from the PFI only. Risk based pricing methodology will be followed i.e., Higher the risk coverage applied, then Higher will be pricing subject to other terms and conditions. Although it would be PFI decision to charge the cost of risk sharing to customer. PCGC may impose price cap for special program based products.
Answer: A borrower availing refinance facility under the any SBP scheme may also obtain a Credit Guarantee Facility for the same loan and vice-versa.
Furthermore, in such cases, the mark-up rate applicable under the refinance scheme shall prevails. The outstanding portfolio and the new loans are eligible for Credit Guarantee. However, not disbursed loan may not be eligible for the Credit Guarantee Cover.
Answer: Facility is available for;
Answer: No, initially the PCGC is providing risk sharing services on portfolio basis; although different segment of the loan i.e., SME, Agriculture etc. may have different risk coverage ratios.
Answer: The PFI shall follow the SBP relevant Prudential Regulations. The scope of Credit Guarantee facility and the PFI credit policies shall be followed for the borrower selection criteria. The RSA shall have details regarding the general guidelines for the borrower selection criteria.