BSD Circular No .09 of 2004
May 29, 2004
The Presidents/Chief Executives
All Banks/ DFIs/NBFCs
Dear Sirs/Madam,
GROUP LIABILITIES IN THE CIB REPORTS
The definition of “Group” for the purpose of CIB report as notified vide Circular
No. SBP/CIB-23/94 dated August 22, 1994 has been reviewed. It has been decided
that in the CIB report, the grouping of borrowers shall now be done on the basis
of following criteria:
a) The names of the “Group” companies shall be reported by the financial institutions
according to the definition of “Group” as contained in Definition No. 14 of
the Prudential Regulations (PRs) for Corporate /Commercial Banking. Thus, the
onus for correct formation of the group as per definition given in the Prudential
Regulations will be on Banks/DFIs/NBFCs.
b) Banks/DFIs/NBFCs will ensure that while determining the group relationships
in terms of criteria prescribed in the PRs, they should not consider the foreign
national directors, directors of companies under liquidation, and nominee directors
of the following entities/agencies:
· Foreign Controlled Entities.
· Banks/DFIs.
· Public Sector Enterprises.
· Federal/Provincial Government.
· Private Sector Enterprises’ nominee directors on the Board of Public Sector
Enterprises.
c) The definition of the Group as contained in PRs shall, however, be not applicable
in the context of Government owned / controlled entities notwithstanding the
fact these are listed or unlisted.
2) Since reflection of negative information in the credit report of any party
adversely impacts its relationships with its lending institutions, therefore,
Banks/DFIs/NBFCs are advised to be very careful while reporting the names of
group entities in the CIB data. In case any party disputes the group relationship,
the reporting Bank/DFI/NBFC should be able to defend its position with documentary
evidence.
3) The above changes in the grouping criteria of companies have necessitated
collection of certain additional data from the financial institutions. Therefore,
existing formats of CIB data collection (viz. CIB-I, II and III) circulated
vide BSD Circular No.4 dated 25th February, 2003 have been revised. The revised
formats for CIB I, II and III are enclosed as Annexure-I. Banks/DFIs/NBFCs are
advised to start collecting the additional information called for in the above
formats from their clients and form the groups as per definition of the “Group”
given in Prudential Regulations. The SBP will start collecting the monthly CIB
data on the revised formats after revising its data capturing software application,
for which banks/DFIs/NBFCs will be advised in due course.
Please acknowledge receipt.
Attached: Annexure-I
Yours faithfully,
(JAMEEL AHMAD)
Director
