Date: [ ]

LIMIT TYPE: NEW/RENEWAL EXPIRY:[date]

CREDIT APPROVAL
FOR FUNDED/UNFUNDED FACILITIES TO
Company name

INTRODUCTION

Introduction to Company, group overview, nature of business, commencement of operations,

location of facility(ies), legal status, stock exchanges etc.

EXISTING RELATIONSHIP & ACCOUNT PERFORMANCE

Discuss the existing relationship and performance of account with MBL in terms of: Levels of
Limits, Utilization of Limit, Account Performance, Account Profitability, Funded/Non-funded
Business etc.

PROPOSED LIMITS

The current proposal is being put forward to the management to seek a RENEWAL/NEW
LIMIT for ABC.
Funded Existing New

Istijrar

UnFunded Existing New

L/C’s (Usance and or Sight)
Guarantees
Forward Cover

The funded Facility is Valid for upto [Insert date] or for [Insert time Period] years from the date of
first drawdown. The non-funded facilities are valid till [ insert date ]

Note: MBL’s per party exposure (30% of its unimpaired capital and reserves) as at xx-xx-20xx is Rs
mm and that the proposed limits are within the exposure. Furthermore, MBL’s per group exposure as
at xxx is Rs xxmm and that the overall exposure to the group is within the allowable limit.

Give reasons/justification for your recommendation i.e. for enhancement / reduction in limits

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TERMS AND CONDITIONS

Funded
Facility type Master Murabaha
Facility amount
Purpose
Profit Rate
Facility Tenor
Sub Murabaha Tenor
Payment of Murabaha
Cost component
Payment of Murabaha
Profit component
Security

Non-Funded
Facility Type Letters of Credit Facility (Usance and or Sight)
Purpose
Facility Amount
Security [Preferably for both sight and usance. However, usance line must
be secured as a policy and exception could only be allowed after
COO/CEO approval.]
Facility Service Charges [PKR Equivalent]
Facility Expiry
Facility Type Guarantees
Purpose
Facility Amount
Facility Service Charges [PKR Equivalent]
Facility Expiry
Security

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 SPONSORS/GROUP PROFILE
Sponsors/group background, overview, brief financials, associated companies etc. It is highly
recommended that two worksheets providing consolidated key group financials (B/S as well as I/S
items) and summarizing MBL’s exposure (funded & nonfunded) to the entire group are attached as
annexure to the memo.

COMPANY PROFILE
The section must cover the following areas of business/operations in detail::

Raw material & supplier info (reliance on suppliers, alternative sources of raw material, terms of
credit offered etc)

Technical information on Plant and equipment, Capacity utilization, recent BMR, new technology,
ISO certification etc

Products and Product break up (market share w.r.t competitive products)

Pricing and credit terms of Product

Distribution, Selling/ Marketing strategy

Financial Strategy

Buyers Info. (names of major buyers with their share of total sales)

Ownership & Board of Directors:

Board of Directors and ownership structure

Shareholders Percentage shares

held

Total 100.00

Must clearly mention the shareholding owned directly by the sponsors and/or through other group
companies.

Management Overview and Strategy:

Discuss the Key Management along with experience and competence of key managers. Brief
overview of the management business strategy etc.

Recent Operational Performance Overview:

Discuss the recent operational performance of the company – in terms of production and sales,
marketing, etc

FINANCIAL REVIEW (AUDITED RESULTS UPTO JUNE 30, SEPT 30, DEC 31, 200X)

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The following table illustrates selective financial highlights of the company over the past three years
(atleast)

Insert Table (last 3 years key financials(audited) as well as latest available un-audited numbers)

Financial review of the company is discussed in terms of profitability, leverage, efficiency, liquidity
and activity as follows:

Profitability (Discuss Income Statement, Net Sales, Gross Margins, Operating Margins etc)

Leverage (Discuss Leveraging, debt financing, short term and long term finances, purpose of such
financing – inventory financing/BMR etc.)

Operating Efficiency Ratios (Discuss Inventory Turnover, Days receivable, Days Payable, Operating
Cycle Days, asset turnover etc)

Liquidity and Cashflow (Current Ratio, Net Operating Cash Flow, EBIDA, Net working Capital)

Projections and Debt Capacity Calculations (Mandatory for Long Term Financing requests of
tenors over 3 years)

The section should also discuss the most recent financials available – (management accounts, un-
audited accounts, projections etc).

Note: The commentary on the financial performance must explain the underlying reasons for any
changes in margins, ratios, increase/decrease etc. For example, a statement only stating that the gross
margin improved from x% to y% is not acceptable. The fact must be supported by reasons for such
change.

FINANCIAL ARRANGEMENTS

Short Term Finances:

Short-term finance and security (facility Type, rate, security)

Redeemable Capital and Long Term Finance Facilities:

Long-term finance and security (facility Type, rate, security)

INDUSTRY & MARKET

In case if the industry section is lengthy (say over 2 pages), the same may be attached as annexure
and an industry report synopsis may be provided (here) in the credit memo.

Global Industry overview

 Key Industry dynamics
 Demand-Supply Stats
 Key Players
 Growth estimates and future outlook
Industry Overview in Pakistan

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  Demand Supply Stats
 Growth estimates
 Structure of Industry: Raw Material, Suppliers Key Players and market share
 Domestic Market Dynamics (Bargaining Power of Buyers, Bargaining Power of Suppliers,
Threat of Competition, Threat of Potential Entrants, Product Substitutes)
 Critical Success Factors – Regulatory Framework, Taxation, Laws etc
 Future outlook

Assessment of Business Risks and their Mitigants::

Raw material & supplier (reliance on suppliers, alternative sources of raw material, terms of credit
offered etc)

Technology, Capacity utilization, certification etc

Market share w.r.t competitive products, Demand / Supply dynamics

Pricing. Reliance on few large buyers

Distribution, Selling/ Marketing strategy

Duty/tax structure

Succession risk

CREDIT CHECK/MARKET CHECK (FROM OTHER FINANCIAL INSTITUTIONS, CUSTOMERS,

INDUSTRY SOURCES/EXPERTS ETC.)
[Atleast two references must be obtained and filed in the credit file. Any credit reference being
reported must include the name & contact no. of the person. For any new relationship with a private
limited, partnership or proprietorship, a credit report from D&B is recommended.]

Any facility(ies) rescheduling done with any FI over the last 5 years must be mentioned in this
section along with relevant details.

COMPLIANCE WITH PRUDENTIAL REGULATIONS [NEW PR] AND AUDIT

As per the audited Accounts dated Required Actual
xxxx

(If non-compliance then explain through note)

Audit Qualifications if any?? Qualified or Unqualified

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CIB REPORT
[Must be requested at the time of initiating the credit proposal and should be part of the package to
be submitted for management’s approval]

If credit is being recommended despite overdues reported in the CIB, the same must be justified.

SEARCH REPORT
Discuss findings of Search Report

[Disbursement will be subject to clear CIB and satisfactory search report.]

RECOMMENDATION

It is recommended that Meezanbank may renew the facilities at current/enhanced levels as below on
the basis of following strengths:

 Strength 1
 Strength 2
 Strength 3

Funded New
Istijrar Rs 100 Mn
UnFunded New
L/C’s (Usance and or Sight) Rs 100 Mn
Guarantees Rs 40 Mn

Prepared by Reviewed By

___________________

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