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Credit Policy


Credit Guarantee Scheme

Credit Guarantee Scheme was introduced in March, 2010 to enhance flow of credit to Small Enterprises & farmers. The Scheme is supervised by Technical Committee on Credit Guarantee (TCCG) comprising representatives from State Bank of Pakistan, PBA and Donor Agency. and implemented by Credit Guarantee Office (GCO) in SBP, BSC. Participating banks are selected on predefined Evaluation Criteria, and limits are accordingly allocated to them, with coverage of 40% of the outstanding principle in case of default of the borrower.


All sectors (trading, manufacturing and service) are eligible for this scheme.

Maximum Loan Limit:

  • 15 million for Small Enterprises
  • 2 million for Farmers.

Small Enterprises:

Small enterprise is defined under the Scheme as under:

Employees Up to 20
Sales Turnover Up to Rs. 75 million

Farmers with up to Economic Landholding are eligible as under:

Punjab and KPK Up to 50 Acres
Sindh and Baluchistan Up to 64 Acres


Short and Medium term loans of up to 3 years.


Mark-up to be decided by Participating Financial Institutions/Banks

Basic Procedure of availing loan:

  • PFIs evaluate loan requests & extend facility to the Eligible Borrowers.
  • Forward the cases to Credit Guarantee Office (CGO) at SBP BSC for extension of guarantee facility, from where, the guarantee cover is issued.
  • In case of default by the borrower, the lending bank claims reimbursement of the guaranteed amount of loan from State Bank to the extent of 40% of principal outstanding.

Classification and Reimbursement:

On default of loan and its classification as Loss as per the relevant PRs, the bank gets the right to lodge claim of the guaranteed amount. The PFIs shall lodge claims on quarterly basis (i.e. within first 10 days of every quarter) against all loans falling under the Loss category in the previous quarter as per the format CG-3 duly audited and authenticated by their Internal Audit Department. Within a period of 6 working days, the bank’s claim is honored.


The re-imbursement of the claim(s) by State Bank shall not obviate lending bank from right of recovery of the defaulted amount. The banks shall continue with their regular procedure for recovery of loan and status shall be reported to the CGO on yearly basis. At recovery of defaulted amount, it will be treated as recovery of principal and the concerned bank shall remit proportionate share to SBP within two working days. The costs incurred on recovery efforts shall be borne by the concerned PFI and shall not be passed on to the Guarantee Fund.

The Guarantee Scheme having full particulars of the Scheme along with frequently asked questions may be seen at link given below:

S.no Title Downloads
1 Credit Guarantee Scheme 2017 Download
2 Credit Guarantee Scheme Download