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State Bank guidelines for infrastructure financing

KARACHI (July 24 2005): The State Bank of Pakistan, after consultations with various stockholders, has formulated guidelines for banks and development finance institutions (DFIs) for infrastructure financing (IPF).

According to a circular issued by SBP on Saturday, July 23, 2005, infrastructures require large investments and longer gestation periods for development, construction, start-up and operation.

The guidelines have been tailored to the specific needs of the related parties. It is hoped that these guidelines would help banks and DFIs to develop expertise for financing infrastructure projects by evaluating the intrinsic cash flow generating ability of these projects.

According to the circular, banks and DFIs are encouraged to prepare their own structured lending schemes for the development of infrastructure financing by conducting or arranging their own studies to determine the potential in specific infrastructure projects.

These guidelines are aimed at facilitating unhindered flow of credit without any risk to the banks and DFIs. The banks and DFIs will also devise proper checks and controls to ensure necessary oversight on IPF products.

These guidelines have been placed at SBP web-site http://www.sbp.org.pk/publications/index.asp for consultation purpose.

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