The National Credit Guarantee Company Limited ("NCGCL" or the "Company") was established in Pakistan as a limited liability company under the Companies Act, 2017, on March 18, 2022. The Company has obtained a license to operate as a Non-Banking Finance Company (NBFC) to offer Investment Finance Services in accordance with the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, and the Non-Banking Finance Companies and Notified Entities Regulations, 2008.

In CY19, SBP established the Pakistan Credit Guarantee Company (PCGC) in order to transform the DFID’s Financial Inclusion Program (FIP) into an institutional setup and continue its positive effects on the promotion of SME lending in Pakistan. PCGC was set up as a Partial Risk Sharing Facility by the State Bank of Pakistan to incentivise the FIs to lend more to the collateral-deficient SME and agriculture sector. Therefore, its customers consist of commercial banks, DFIs and microfinance institutions. The initial investment for PCGC came from UK’s Department for International Development (DFID) and GoP. Lately, GoP and Karaandaz formed National Credit Guarantee Company Limited (NCGCL). NCGCL is in its phase of business growth, wherein Karandaaz Pakistan Limited has taken the initiative to build a financially inclusive ecosystem where underserved and unserved entities generating economic activity thrive through easy access to affordable credit, leading to sustainable growth and economic development. Its main office is located at 1-E, Ali Plaza, Nazim-ud-Din Road, Blue Area, Islamabad.

The Company received its certificate to commence business on December 24, 2024. The Company's operations will focus on facilitating access to credit for underserved and unserved entities that generate economic activity or enhance productivity. This will be achieved by mitigating lender risks and encouraging financial institutions to provide financing to high-impact yet underserved segments. NCGCL's Strategic Operating Framework is built around five core pillars, emphasizing automation, connectivity, and Large Language Models (LLM), all integrated through an LLM-first and data-driven approach. The five pillars are: 1) Data-Driven Foundation, 2) Connected Ecosystem, 3) Product Innovation & Expansion, 4) Sustainable Operations & Scalability, and 5) Intelligent Risk Assessment & Underwriting.

NCGCL is a joint venture between the Ministry of Finance, Government of Pakistan & Karandaaz Pakistan, funded by the UK’s Foreign Commonwealth and Development Office (formerly known as DFID) under its Financial Inclusion Program. Karandaz Pakistan holds 56% stake while 44% stake lies with the Ministry of Finance, Government of Pakistan.

Karandaaz Pakistan is a not-for-profit public company limited by guarantee set up under Section 42 of the Companies Act, 2017. Karandaaz was established in 2014 with seed grant funding from the UK Government’s Foreign, Commonwealth and Development Office (formerly known as DFID). For its digital financial services work, Karandaaz Pakistan is availing grant funding from the Bill & Melinda Gates Foundation. While the presence of the Ministry of Finance supports NCGCL through its credibility, risk mitigation and contingency support.

Karandaz's institutional strategy builds on over a decade of expertise in advancing financial inclusion for SMEs and unbanked individuals. With a proven track record of impact-driven investments and transformative initiatives, Karandaz is committed to fostering innovative financial solutions and exploring green and climate-related opportunities

An amount of PKR 7.5 billion was transferred to the Company by the State Bank of Pakistan. The Capital that was transferred was belonged to the Financial Inculsion Program  of FCDO. Following the transfer, shares were issued to both shareholders in the approved ratio, as sanctioned by the Federal Cabinet.

The Board consist of eight (8) Directors, including the Chief Executive. Except for the Chief Executive, all Directors are non-executive. The remaining seven (7) Directors (excluding the Chief Executive) are appointed, removed, or replaced as follows: (a) Karandaaz nominated and appointed four (4) non-executive Directors. (b) The Government of Pakistan - Ministry of Finance (GOP-MOF)  nominated and appointed three (3) non-executive Directors.

Kashif Umar Thanvi, Chairperson of the Board, Kashif Umar Thanvi is the Founder of ZaraatTech, an AgriTech consultancy pioneering contemporary models for enhanced rural financial inclusion. He is currently Director Investments at Acumen Pakistan. He is also serving on the Board of “Pakistan Agricultural Coalition”. He has an MBA from IBA, Karachi, and a Bachelor of Science from Government College, Lahore. Amna Shabbir is a seasoned civil servant from the 37th Common Training Program Batch (2010), serving as Deputy Secretary of Banking & Internal Finance at the Ministry of Finance. Her portfolio encompasses the management of Financial Inclusion projects with international partners such as the World Bank and ADB. Ahmed Umair has over 20 years of experience in agriculture, having founded Vital Agri Nutrients Ltd and Vital Green Ltd. He is currently a Senior Specialist SME with UNDP through MAGP and works with IFC on CPSD-Agro processing. Faresa Ahsan is a Partner at a leading Law Firm, viz. Liaquat Merchant & Associates, which specialises in banking and finance, Islamic Banking, technology contracts, e-commerce law, derivatives, capital markets, LNG projects, tenders, and procurement. Bilal Amjad Khan carries diversified work experience in the banking sector and has served in key positions in Pakistan & GCC. During his banking career spanning more than 20 years, he has developed and managed innovative portfolios and products in the Wholesale, Corporate, SME, and Transaction Banking domains. Adeeb Ali Mirza is an experienced finance professional with a proven track record of implementing strategic financial initiatives to improve economic performance. He brings over 20 years of strategic planning, financial management, and internal controls expertise. He has served as the Chief Financial Officer of Karandaaz Pakistan since 2016 and is also a member of the Board of Directors of Excel Labs (Private) Limited. Amjad Mahmood, Additional Finance Secretary (IF/INV/IGF), has 32 years of diverse experience in Pakistan's Civil Services. He has served in various executive positions during his service. He has served as Advisor to the Board of Directors of the Asian Development Bank (ADB). He has vast experience in dealing with matters relating to the Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP), National Bank of Pakistan (NBP), House Building Finance Company Limited (HBFCL), National Security Printing Corporation (NSPC) and other Financial Institutions/ Regulators/Organizations. He holds a Master’s in Administration & Management from the Institute for Development Policy and Management, UK.

The Board ensures effectiveness and accuracy by operating through three committees. The first is the Human Resource & Remuneration (HR&R) Committee, which is responsible for reviewing and recommending Human Resource Management policies, strategies, and plans to the Board of NCGCL. The second is the Audit Committee, tasked with managing external audit matters, overseeing the internal audit function, and ensuring coordination between internal and external audits. The third is the Credit Guarantee Committee, which reviews and recommends for Board approval all policies and manuals related to the Credit Guarantee function, including any changes. It monitors the credit guarantee portfolio, evaluating risks such as default, concentration, loan losses, and financial performance, and reviews reports from the Credit Guarantee team. The Committee also reviews, approves, or recommends credit guarantee proposals based on the authorization matrix, considering factors like partner institutions, financial instruments, pricing, returns, tenor, risk profile, and transaction size. Additionally, it periodically assesses policy compliance, portfolio progress, and risk limits, including sector allocation and portfolio thresholds, while performing any other Board-delegated duties.

A.F. Ferguson & Co., Chartered Accountants, a member firm of the PwC network, has been appointed as the External Auditors of the Company for the year CY25. The Auditor is listed in category “A” of the State Bank’s panel of auditors. They have expressed an unqualified opinion on the financial statements of the Company for the year ended 31st December 2024.

The organizational structure of the Company is established through six heads of departments, all of whom report directly to the Chief Executive Officer. The departmental heads consist of the Chief Operating Officer, Chief Investments Officer, Chief Guarantee Officer, Chief Product and Innovation Officer, Chief Financial Officer, Chief People Officer, and Chief Risk Officer. These departments also report to their respective Board Committees. Some of the key management positions, which are yet to be filled, will be filled with competent resources over the next quarter, including Chief Risk Officer and Chief Financial Officer, among others.

Ammar Habib Khan, Chief Executive Officer (CEO) is a CFA Charterholder, FRM certified, and a recognized Sustainability & Climate Risk (SCR) professional in Pakistan with over 14 years of experience in Wholesale Risk Management, Corporate Strategy, Energy Economics, and Asset Management. He has led the establishment of financial services at CreditBook and Pakistan’s first SME guarantee company, and was a founding member of three NBFIs, including Parwaaz Financial Services. An accomplished author, he writes weekly for Dawn and The News and is currently pursuing the Accelerated Management Program at Yale School of Management. All departmental heads are adequately experienced and educated to handle their respective roles. While report directly to the CEO.

The management operates in accordance with Board-approved guidelines, adhering to established policies and models governing both guarantees and investments. While there are currently no dedicated management committees, they will be constituted as and when the need arises in the future.

The credit scoring models would be capturing the cash flow stability, leveraging ratios, liquidity ratios, supply chain dynamics, customer concentration, supplier dependence and contractual arrangements. The resultant score will directly influence the guarantee coverage level. Wherein the guarantee coverage would be decided by the approving authority. In addition to this, for obligation monitoring Partner Financial Institutions will provide regular financial reports and updates on key customers, suppliers, and industry conditions to ensure the borrower’s risk profile remains aligned with the original assessment. Separate scoring models will be used for evaluation of partner financial institutions where in key factors would be evaluated like Capital Adequacy Requirments, Asset quality, Liquidity Ratios and profitability ratios.

The Company’s risk management framework incorporates a comprehensive assessment of the borrower, with a strong emphasis on cash flow stability and the borrower's role within the broader value chain. The framework works at three risk levels: 1) Obligor, 2) Partner Financial Institutions (PFIs) and 3) Sectoral level. The framework work based on three prime documents namely: 1) Risk Appetite, that captures the distinction of core capital and risk capital 2) Guarantee Policy, that outlines the policy decisions and risk assessment and mitigation parameters for the issuance of guarantees, 3) Investment Policy Statement, that outlines the investment policy and risk management. At the core of this framework is the Internal Capital Framework, developed to ensure prudent guarantee issuance and to enhance financial resilience. Supported by an initial capital base of PKR 7.5 billion, the framework introduces a segmented capital structure comprising PKR 2 billion in Core Capital—ring-fenced exclusively for prudential protection and reserved to absorb extreme or unexpected credit losses—and remaining capital in Risk Capital, which is dedicated to internal capital adequacy assessments and underpins the determination of a sustainable scale for guarantee issuance. 

Credit Guarantee Institutions (CGIs) are a type of NBFC established primarily to enhance access to finance by offering credit guarantees. These guarantees mitigate the risk of borrower default, thereby encouraging lending to underserved market segments. CGIs are typically regulated and licensed by central banks or financial sector authorities and must adhere to minimum capital requirements. A key focus of CGIs includes supporting small and medium-sized enterprises (SMEs), promoting sustainable and social finance, and facilitating access to credit for segments with limited or no access to formal financial services. Despite their importance, credit penetration among SMEs and underserved segments remains low. To bridge this gap, CGIs provide third-party credit risk protection to lenders by covering a portion of losses in the event of borrower default. In return, they charge a nominal guarantee fee. This mechanism allows lenders to extend credit more confidently to riskier market segments. Most CGIs are either government-owned or funded by multilateral institutions and are designed to play a developmental role in the financial ecosystem. Given their mandate, CGIs often carry significant credit risk and rely heavily on shareholder equity and grants to sustain operations. The Private Infrastructure Development Group (PIDG) is one such initiative promoting sustainable development and climate action through infrastructure financing and capital market development. GuarantCo Ltd, a PIDG member, supports infrastructure projects in low-income and below-investment-grade countries, including Pakistan, by addressing financial, technical, and environmental barriers throughout the project lifecycle and across the capital structure. InfraZamin Pakistan Limited (IZP) is a recent initiative under PIDG, established to catalyze private sector participation in long-term, local currency infrastructure financing in Pakistan. The initial credit guarantee platform in Pakistan, Pakistan Credit Guarantee Company (PCGC), was funded by the UK’s Department for International Development (DFID) and the Government of Pakistan (GoP). In January 2024, PCGC was transitioned into the National Credit Guarantee Company Limited (NCGCL)—a joint initiative of the GoP and Karandaz Pakistan—signifying a renewed commitment to strengthening the credit guarantee framework in the country.

The Company is currently in the early stages of its business growth. Its market position is expected to strengthen over time as it achieves greater penetration in the SME sector through expanded credit guarantee coverage.

NCGCL is expected to generate revenue from multiple sources, including investment income, guarantee fees, management fees, and advisory fees. Investment income will be realized by deploying available capital in sovereign debt instruments and the capital market with a long-term focus. Guarantee fees will be earned through the provision of guarantees, leveraging available capital in similar investment avenues. Additionally, NCGCL will charge a management fee for extending guarantees to third parties for specific mandates, utilizing external capital designated for this purpose. As core guarantee operations expand, NCGCL may also introduce capital market and advisory services to support the growth and operations of relevant entities.

During CY24, the Company recorded a net profit of PKR 195 million, primarily driven by interest income from savings accounts maintained with a reputable bank holding a strong credit rating. Going forward, based on the projected financial statements and the current business strategy, the Company is expected to maintain adequate profitability.

The current approach of conventional FIs to product development and distribution primarily relies on generic, short-term financial products that are not data-driven, risk-informed, or tailored to specific sectors, leading to misaligned pricing and limited scalability. The targeted future state envisions data-driven, value chain-specific products that accommodate sectoral differences, employ risk-based pricing, and are scalable across the financial sector, with continuous iteration based on data and product performance.

In order to manage the credit risk the Company has an approved Guarantee policy that empowers the Company to issue partial credit guarantees ranging from 5%-75%, depending on borrower risk, sector, and presence of third-party capital. The policy emphasizes prudent risk management through caps on exposure per sector, program, and financial institution, while ensuring borrowers and lenders meet eligibility and creditworthiness criteria. Comprehensive risk assessments—including cash flow analysis, value chain position, and institutional credit ratings—guide guarantee decisions. Ongoing monitoring, reporting, and annual reviews ensure portfolio health, with a tiered approval structure involving the CEO, Board Guarantee Committee, and full Board based on exposure size and complexity. The policy also extends to capital market instruments under strict conditions and is subject to regular review.

Market risk arises from the Company’s investments, which are managed in accordance with an approved Investment Policy Statement. This policy sets out the guiding principles and strategies for asset allocation, emphasizing a long-term investment horizon, capital preservation, and an above-average risk tolerance. As of December 31, 2024, the Company held short-term investments of PKR 753 million in mutual funds, classified at fair value through profit or loss, thereby exposing it to price risk driven by macroeconomic factors. Conversely, PKR 6.7 billion was placed in savings accounts (floating rate instruments), mitigating exposure to interest rate risk. The Company also has no exposure to foreign exchange risk, as it operates entirely in its functional currency.

The core capital will be invested in treasury bills of less than or equal to 3months maturity. The rest of the liquidity would have a composition of government papers plus bank placements, having AAA and AA+ rating. No single fixed term paper would be having a tenor of more than 3 years, the total fixed term investment would not constitute more than 30% of the total liquid investments. The overall duration of the portfolio is intended to be less than 360 days, so that sufficient liquidity would remain avaialble at all times.

The paid up capital of the Company stood at PKR 7.5 billion as of end Dec'24. Of this, PKR 2 billion has been allocated as Core Capital, which is reserved internally to ensure self-sustainability and to absorb extreme or unexpected credit losses. The remaining has been designated as Risk Capital, which is used to determine the scale and scope of guarantee issuance. This strategic allocation is more than a compliance measure; it reflects NCGCL’s strong commitment to fiscal discipline, active risk management, and long-term financial sustainability.