HBL signs Pak EXIM Bank Master Policy for insured export receivables

HBL has signed a Bank Master Policy with the Export-Import Bank of Pakistan that will use insurance on exporters’ receivables to increase the commercial bank’s capacity to finance cross-border sales.

Under the arrangement, Pak EXIM will provide credit insurance on eligible export receivables financed by HBL. The risk-sharing mechanism is intended to protect the bank against non-payment by overseas buyers, allowing it to support exporters while reducing the amount of buyer credit risk retained directly on its own balance sheet.

That makes the agreement more than a generic exporter partnership. Pak EXIM’s Bank Master Policy is specifically designed to protect a financing bank where international receivables backing an export facility are not paid by the importer. By transferring part of that payment risk to the export credit agency, the structure can increase the bank’s willingness to finance exporters selling on credit rather than requiring customers to rely exclusively on cash in advance or letters of credit.

HBL said the policy should help exporters enter new markets, sell to new buyers and obtain finance with the support of export credit insurance. Neither institution disclosed the policy limit, percentage of loss covered, premium, eligible advance rates or the volume of receivables expected to be insured.

The transaction follows Pak EXIM’s recent expansion of its wider risk-sharing infrastructure. BCR has already covered the export credit agency’s PKR3bn SME risk pool and its reinsurance agreement with the Islamic Corporation for the Insurance of Investment and Export Credit. The HBL agreement is a separate implementation step because it places a commercial bank directly inside that insurance architecture and creates a route through which insured receivables can support additional lending.

Pak EXIM describes the Bank Master Policy as a means of increasing a bank’s risk appetite and helping close export funding gaps. HBL brings an existing trade and export-finance franchise to the structure, while the ECA absorbs specified non-payment risk.

The significance for receivables finance is therefore in the interaction between insurance and lending capacity. Instead of treating export credit cover only as protection for the exporter, the arrangement uses insured receivables as part of the bank’s credit-risk framework.