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REGULATION-III LINK ON BANK’S EXPOSURE AGAINST UNSECURED ADVANCES
No bank shall provide financing
facility in any form of a sum exceeding Rs. 100,000/- (Rupees one hundred thousand only)
to any one individual or person without obtaining realizable securities of the value not
below the outstanding amount. Financing facilities granted without securities including
those granted against personal guarantees shall be deemed as "clean" for the
purpose of credit regulations. Provided further that:--
(a) at the time of granting a clean facility, banks shall obtain a written declaration to
the effect that the borrower in his own name or in the name of his family members, has not
availed of such facilities from other banks so as to exceed the prescribed limit of Rs.
100,000/- in aggregate.
(b) no clean facility shall be granted to frustrate the objective of credit restrictions
in force for the time being.
(c) the purpose for which a clean facility is sanctioned shall be expressly stated in the
sanction letter.
2. Clean facilities granted to finance the export of commodities eligible under Export
Finance Scheme shall be exempt from the per party limit on clean facilities.
3. Financing covered by Export Credit Guarantee Insurance Scheme may
also be excluded from per party limit of Rs. 100,000/- on clean facilities.
4. The aggregate exposure of a bank against all its clean facilities
shall not, at any point of time, exceed the amount of the bank’s capital and General
Reserves (free of losses.)
5. Any violation or circumvention of the above regulation shall
render the bank liable for penalties under the Banking Companies Ordinance, 1962
6. Advances given to employees of a bank in accordance with their
entitlement, shall be exempt from the application of the Regulation-III.
