Islamabad: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday presented the amended draft of the Credit & Suretyship (Conduct of Business) Rules, 2018 on its official website for garnering public feedback, according to news sources. The proposed amendment is aimed at restricting the country’s foreign exchange outflow for reinsurance purpose
The proposed amendment is aimed at restricting the money outflow for reinsurance purpose. It seeks to delink the reinsurance, conditional of collateral, to save the foreign exchange (FOREX). The amendment will facilitate the insurance sector by increasing local retention of insurance risks.
The existing rule of procuring collateral on bonds/guarantees of an amount equal to 80% of the sum insured, left after the reinsurance was highlighted at the stakeholders’ consultation meeting. It was pointed out that the condition has caused a reduction in businesses and retention on suretyship and credit venture, given the insurance sector’s tendency to park risks in reinsurance.
Consequently, the local businesses are required to pay a premium for foreign companies as reinsurance businesses are based abroad. The amendment suggests the insurance companies to gather collateral at 10% of the sum insured under the insurance guarantee document.
Hazafa reveres the art of writing and has been turned into a property enthusiast by profession. Her daily survival kit includes; tea, coffee, keyboard and paperbacks.
