PACRA Assigns Initial Entity Ratings to National Credit Guarantee Company Limited

National Credit Guarantee Company Limited (“NCGCL” or the “Company”) is a joint venture between the Ministry of Finance, Government of Pakistan (44%) and Karandaaz Pakistan (56%). The Company has been established to enhance access to finance for small and medium enterprises (SMEs), agricultural enterprises, and other underserved market segments. The shareholding structure is a fundamental pillar of NCGCL’s credit rating. Both the Company’s vision and its operational framework are deeply rooted in this strategic partnership. In an environment marked by chronic underinvestment and a persistent shortfall in SME financing, NCGCL is expected to implement a comprehensive strategy aimed at unlocking capital for high-impact sectors. A key element of this strategy from ratings’ perspective is the Company’s internal capital framework. Backed by an initial capital base of approximately PKR 8 billion, the framework introduces a segmented capital structure. 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 capital 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. To further promote credit access, NCGCL has adopted an approved Guarantee Policy that allows the issuance of partial credit guarantees ranging from 5% to 75%. The guarantee structure is supported by a rigorous risk assessment framework, with strong exposure controls both at the sectoral level and at the level of Partner Financial Institutions (PFI). In addition, a robust collateral assessment and monitoring mechanism has been put in place to strengthen oversight. Risk assessments are conducted across three levels: partner financial institutions, where risk is shared between NCGCL and the PFI; sector-level exposures; and individual obligors. This layered approach ensures that risks are thoroughly evaluated and managed at every stage of the guarantee process. Alongside its guarantee operations, NCGCL has developed an Investment Policy Statement focused on capital preservation, targeting returns that exceed inflation on a mid-to-long-term basis. This is achieved through strategic asset allocation into sovereign instruments and high-grade fixed income securities, all within tightly defined risk parameters. The core investment portfolio is concentrated in short-duration government securities. The overall investment book adheres to prudent benchmarks to maintain an optimal balance between risk and return.
The Company's strong sponsor backing, robust risk assessment processes, and well-defined operational policies aimed at ensuring obligor credibility are key considerations in its credit rating. Any change in the stated factors would be critical to the assigned rating.

About the Entity
The National Credit Guarantee Company Limited is a public-private partnership, jointly owned by Karandaz Pakistan (56%) and the Ministry of Finance, Government of Pakistan (44%). Incorporated as a limited liability company under the Companies Act, 2017, on March 18, 2022, NCGCL has been granted a license to operate as a Non-Banking Finance Company (NBFC). The Company is authorized 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. NCGCL received its certificate of commencement of business on December 24, 2024.
The Board consist of eight (8) Directors, including the Chief Executive. Except for the Chief Executive, all Directors are non-executive. 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.