The National Credit Guarantee Company Limited (“NCGCL” or the “Company”) was incorporated in Pakistan on March 18, 2022, as a limited liability company under the Companies Act, 2017. The Company has been granted a license to operate as a Non-Banking Finance Company (NBFC) for providing Investment Finance Services under the applicable provisions of the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, and the Non-Banking Finance Companies and Notified Entities Regulations, 2008.

In CY19, the State Bank of Pakistan (SBP) established the Pakistan Credit Guarantee Company (PCGC) to institutionalize the initiatives undertaken under the DFID’s Financial Inclusion Program (FIP) and to sustain its contribution toward enhancing SME financing in Pakistan. PCGC was structured as a Partial Risk Sharing Facility aimed at encouraging financial institutions to extend financing to collateral-deficient SMEs and the agriculture sector. Accordingly, its clientele includes commercial banks, development finance institutions (DFIs), and microfinance institutions. The initial capital base of PCGC was supported by the UK’s Department for International Development (DFID) and the Government of Pakistan (GoP). Thereafter, the Government of Pakistan, in collaboration with Karandaaz Pakistan, established the National Credit Guarantee Company Limited (NCGCL). The Company is currently in its growth phase, with Karandaaz Pakistan spearheading efforts to foster a financially inclusive environment that enables underserved and unserved segments engaged in economic activities to access affordable financing, thereby supporting sustainable economic growth and development. The registered office of the Company is situated at 1-E, Ali Plaza, Nazim-ud-Din Road, Blue Area, Islamabad.

The Company obtained its certificate of commencement of business on December 24, 2024. Its primary objective is to improve access to financing for underserved and unserved segments contributing to economic activity and productivity enhancement. The Company aims to achieve this by reducing the risk exposure of lenders and incentivizing financial institutions to extend financing facilities to high-impact yet underserved sectors. NCGCL’s Strategic Operating Framework is centered on five key pillars and is designed around a data-driven and LLM-first approach, with strong emphasis on automation, connectivity, and the integration of Large Language Models (LLMs). These pillars include: (i) Data-Driven Foundation, (ii) Connected Ecosystem, (iii) Product Innovation & Expansion, (iv) Sustainable Operations & Scalability, and (v) Intelligent Risk Assessment & Underwriting. The Company is entering into multiple loss-sharing arrangements with financial institutions to enhance financial inclusion within the SME segment.

NCGCL has been established as a joint venture between the Ministry of Finance, Government of Pakistan, and Karandaaz Pakistan. The initiative is supported under the Financial Inclusion Program funded by the UK’s Foreign, Commonwealth & Development Office (FCDO), formerly known as DFID. Within the shareholding structure, Karandaaz Pakistan holds a 56% equity stake, while the remaining 44% is owned by the Ministry of Finance, Government of Pakistan

Karandaaz Pakistan is a not-for-profit public company limited by guarantee, incorporated under Section 42 of the Companies Act, 2017. Established in 2014, the organization was initially supported through seed grant funding provided by the UK Government’s Foreign, Commonwealth & Development Office (FCDO), formerly known as DFID. In addition, Karandaaz Pakistan receives grant funding from the Bill & Melinda Gates Foundation to support its digital financial services initiatives. The participation of the Ministry of Finance further strengthens NCGCL’s profile by enhancing institutional credibility and providing support in terms of risk mitigation and contingency backing.

Karandaaz’s institutional strategy is anchored in its extensive experience of over ten years in advancing financial inclusion for SMEs and financially underserved communities. Supported by a strong history of impact-driven investments and pioneering initiatives, the organization continues to emphasize the development of innovative financial solutions alongside the exploration of green and climate-focused financing opportunities.

An amount of PKR 7.5bln was transferred to the Company by the State Bank of Pakistan, representing funds associated with the Financial Inclusion Program supported by the Foreign, Commonwealth & Development Office (FCDO). After the transfer, shares were allotted to both shareholders in accordance with the approved shareholding ratio as sanctioned by the Federal Cabinet. As of the end of Jun'2025, the total asset of Karandaaz were reported at PKR 44 bln.

The Board comprises eight (8) Directors, including the Chief Executive Officer. All members of the Board, other than the Chief Executive Officer, serve in a non-executive capacity. The appointment, removal, or replacement of the remaining seven (7) non-executive Directors is carried out in accordance with the agreed shareholding structure, whereby Karandaaz Pakistan nominates four (4) Directors, while the Government of Pakistan through the Ministry of Finance nominates three (3) Directors.

Mr. Kashif Umar Thanvi, Chairperson of the Board, is the Founder of ZaraatTech, an AgriTech consultancy focused on developing modern solutions to enhance rural financial inclusion. He currently serves as Director Investments at Acumen Pakistan and is also a Board member of the Pakistan Agricultural Coalition. He holds an MBA from IBA Karachi and a Bachelor of Science degree from Government College, Lahore. Mr. Ahmed Umair, Independent Director, brings over 20 years of experience in the agriculture sector. He is the founder of Vital Agri Nutrients Ltd. and Vital Green Ltd. He currently serves as Senior Specialist – SME with the United Nations Development Programme (UNDP) under MAGP and is also engaged with the International Finance Corporation (IFC) on CPSD agro-processing initiatives. Ms. Faresa Ahsan, Independent Director, is a Partner at Liaquat Merchant & Associates, specializing in banking and finance, Islamic banking, technology contracts, e-commerce law, derivatives, capital markets, LNG projects, and procurement and tender-related matters. Ms. Amna Shabbir, Non-Executive Director, is a seasoned civil servant from the 37th Common Training Program (2010 batch) and is currently serving as Deputy Secretary, Banking and Internal Finance, at the Ministry of Finance. Her portfolio includes managing financial inclusion initiatives in collaboration with international development partners, including the World Bank and the Asian Development Bank (ADB). Mr. Taimoor Ali, Non-Executive Director, has diverse experience in digital finance, having held key positions across various organizations. Throughout his career, he has developed and managed innovative financial products. He holds a Bachelor's degree in Information Technology from the National University of Sciences and Technology (NUST). Mr. Adeeb Ali Mirza, Non-Executive Director, is an experienced finance professional with a strong track record of implementing strategic financial initiatives to enhance organizational performance. He brings over 20 years of expertise in strategic planning, financial management, and internal controls. He has served as Chief Financial Officer of Karandaaz Pakistan since 2016 and is also a member of the Board of Directors of Excel Labs (Private) Limited. Mr. Amjad Mahmood, Non-Executive Director, is the Additional Finance Secretary (IF/INV/IGF) and has 32 years of experience in Pakistan's civil service. He has held several senior executive positions throughout his career and has also served as Advisor to the Board of Directors of the Asian Development Bank (ADB). He possesses extensive experience in dealing with institutions including the Securities and Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP), the National Bank of Pakistan (NBP), House Building Finance Company Limited (HBFCL), the National Security Printing Corporation (NSPC), and other financial institutions and regulators. He holds a Master's degree in Administration and Management from the Institute for Development Policy and Management, United Kingdom.

The Board ensures effective governance and oversight through three dedicated committees. The first is the Human Resource & Remuneration (HR&R) Committee, which is responsible for reviewing and recommending Human Resource Management policies, strategies, and workforce plans to the Board of NCGCL. The second is the Audit Committee, which oversees external audit matters, supervises the internal audit function, and ensures proper coordination and alignment between internal and external audit processes. The third is the Credit Guarantee Committee, which reviews and recommends for Board approval all policies, manuals, and revisions related to the Credit Guarantee function. It also monitors the credit guarantee portfolio, assessing key risk indicators such as default exposure, concentration risk, loan losses, and overall financial performance, while reviewing periodic reports submitted by the Credit Guarantee team. In addition, the Committee evaluates, approves, or recommends credit guarantee proposals in line with the delegated authority matrix, taking into account partner financial institutions, instruments, pricing, returns, tenor, risk profile, and transaction size. It also conducts periodic reviews of policy compliance, portfolio performance, and adherence to risk limits, including sectoral allocations and portfolio thresholds, while carrying out any other responsibilities assigned by the Board.

A.F. Ferguson & Co., Chartered Accountants, a member firm of the PwC network, served as the External Auditors of the Company for CY25. The firm is listed in Category “A” of the State Bank of Pakistan’s approved panel of auditors. For the year ended 31st December 2025, the auditors issued an unqualified opinion on the Company’s financial statements.

The organizational structure of the Company is built around seven functional heads who report directly to the Chief Executive Officer. These include the Head of Product, Chief Investment Officer, Chief Guarantee Officer, Chief Financial Officer, Chief Risk Officer, Chief Operating Officer, and the Head of Research & Communications. In addition, the Company Secretary & Head of Government Relations functions as a key coordination role with reporting and liaison responsibilities across governance channels. Each functional department operates under its respective mandate while also maintaining reporting and coordination lines with relevant Board Committees to ensure effective oversight, governance, and alignment with strategic objectives. Some positions within the structure are in the process of being staffed and will be filled with suitable resources in due course to further strengthen operational capacity.

Mr. Ammar Habib Khan, Chief Executive Officer (CEO), is a CFA Charterholder, an FRM-certified professional, and a recognized Sustainability & Climate Risk (SCR) expert in Pakistan. He brings over 14 years of diversified experience spanning wholesale risk management, corporate strategy, energy economics, and asset management. Throughout his career, he has played a key role in establishing financial services platforms at Credit Book and Pakistan’s first SME guarantee company. He has also been a founding member of three Non-Banking Financial Institutions (NBFIs), including Parwaaz Financial Services. In addition to his professional roles, he is an accomplished writer, contributing weekly columns to Dawn and The News, and is currently enrolled in the Accelerated Management Program at the Yale School of Management. All departmental heads within the organization are well-qualified, experienced, and capable of effectively managing their respective functions. They report directly to the Chief Executive Officer, ensuring centralized coordination and strategic alignment across all departments.

The Company’s operations are conducted under Board-approved guidelines, with management ensuring compliance with established policies and approved frameworks governing both guarantee issuance and investment activities. Although dedicated management committees may be formed in the future as operational requirements evolve, the Company presently has several Board-level committees in place, including the Human Resource and Remuneration Committee, the Board Guarantee Committee (BGC) Committee, the Board Audit Committee (BAC), and the Board Risk Committee (BRC), which collectively provide oversight and strengthen governance across key functional areas.

The credit assessment framework will evaluate borrowers using both financial and qualitative factors, including cash flow stability, leverage, liquidity, repayment capacity, supply chain resilience, customer concentration, supplier dependence, and contractual arrangements. These parameters will form the basis of an internal credit rating, which will support the determination of guarantee coverage subject to approval by the competent authority, for ongoing monitoring, Partner Financial Institutions (PFIs) will provide periodic financial and operational updates to ensure the borrower’s risk profile remains consistent with the initial assessment. Separate evaluation models will also be applied for PFIs, focusing on key indicators such as capital adequacy, asset quality, liquidity, and profitability, in line with internationally accepted credit rating practices.

The Company’s risk management framework is designed to ensure prudent guarantee issuance through a comprehensive evaluation of borrower, institutional, and sectoral risks. The framework operates across three levels: (i) Obligor Risk, (ii) Partner Financial Institution (PFI) Risk, and (iii) Sectoral Risk. It is guided by three core documents: the Risk Appetite Framework, which defines the allocation between Core Capital and Risk Capital; the Guarantee Policy, which establishes risk assessment, approval, and mitigation parameters for guarantees; and the Investment Policy Statement, which outlines investment governance and risk management principles, at the center of the framework is the Internal Capital Framework, established to strengthen financial resilience and maintain disciplined risk-taking. Backed by a share capital base of PKR 7.9 billion, the structure includes ring-fenced Core Capital reserved for absorbing severe and unexpected credit losses, while the remaining Risk Capital supports internal capital adequacy assessments and determines the sustainable capacity for guarantee exposure.

Credit enhancement and guarantee institutions play a pivotal role in strengthening financial intermediation by facilitating access to long-term financing, particularly for infrastructure and underserved segments. These institutions provide credit guarantees that mitigate default risk, thereby improving the credit profile of underlying instruments and enabling broader participation from institutional investors. Operating under regulatory oversight, such entities are required to maintain adequate capitalization and robust risk management frameworks, given the contingent nature of their obligations. In Pakistan, infrastructure financing remains constrained by limited availability of long-tenor funding, heavy reliance on bank-based lending, and an underdeveloped domestic capital market. To address these structural gaps, credit enhancement platforms provide partial risk guarantees, enabling infrastructure-related instruments to achieve stronger credit ratings and attract investors such as pension funds and insurance companies. This mechanism supports diversification of funding sources and promotes local currency debt market development. Alongside InfraZamin Pakistan Limited (IZP), other initiatives also contribute to the evolving credit guarantee ecosystem in the country. The National Credit Guarantee Company Limited (NCGCL) focuses on enhancing access to finance for SMEs and priority sectors through risk-sharing mechanisms. These institutions play a developmental role by encouraging financial inclusion and supporting segments with limited access to formal credit. At a broader level, the Private Infrastructure Development Group, through entities such as GuarantCo, supports infrastructure financing in emerging and frontier markets, including Pakistan, by addressing credit, technical, and market constraints across the project lifecycle.

The Company is currently in the early phase of its operations, characterized by a developing business profile and limited market penetration. Its competitive position is expected to gradually strengthen as guarantee issuance scales up and outreach within the SME segment expands. Over time, sustained portfolio growth, improved risk diversification, and enhanced institutional capacity are likely to support a more stable and established market position, consistent with the typical evolution of early-stage credit guarantee institutions under globally applied rating methodologies. Notwithstanding this, the Company has entered into arrangements with multiple financial institutions under loss-sharing mechanisms, aimed at enhancing financial inclusion in the country.

NCGCL’s revenue profile is expected to be driven by a diversified set of income streams, including investment income, guarantee fees, management fees, and advisory-related services. Investment income is primarily generated through the deployment of surplus capital in low-risk sovereign instruments and other capital market avenues, in line with a long-term capital preservation strategy, Guarantee fee income will represent the core revenue source, arising from the issuance of credit guarantees and linked to the scale and risk profile of the underlying portfolio. In addition, management fees will be earned under specific mandate-based arrangements where guarantees are extended using externally allocated capital. Overall, the revenue structure reflects an evolving business model consistent with early-stage credit guarantee institutions, where income stability is closely tied to portfolio growth, utilization levels, and disciplined risk pricing. During CY25, the Company generated investment income amounting to PKR 863 mln ( CY:24 PKR 311 mln).

The Company’s earnings are primarily driven by income from financial assets, reflecting a treasury-based revenue model typical of an early-stage credit guarantee institution. The main contributors include interest income from savings accounts, returns from government securities such as T-Bills and term deposits, and gains from mutual fund investments, supported by prudent liquidity and investment management non-financial income remained minimal, with only limited contribution from the unwinding of long-term security deposits. Overall, the Company’s income base is largely investment-driven, with limited contribution from core guarantee operations at this stage. After taxation, the Company reported a profit after tax of PKR 432.3mln (CY24: 195 mln), supported mainly by stable investment returns and conservative treasury management.

The current product development and distribution practices among conventional financial institutions remain largely reliant on standardized, short-term offerings, with limited integration of data analytics, sector-specific risk insights, or value-chain considerations. This approach often results in sub-optimal pricing structures and constrained scalability across diverse borrower segments, the anticipated evolution of the market reflects a shift toward more data-driven and risk-sensitive product frameworks. This includes the development of sector-specific solutions aligned with underlying value chains, adoption of risk-based pricing mechanisms, and greater product customization to reflect borrower heterogeneity. Over time, continuous performance monitoring and feedback-driven refinement of products are expected to enhance efficiency, sustainability, and alignment with credit risk realities, consistent with analytical considerations typically emphasized in globally applied rating methodologies.

The Company manages credit risk through an approved Guarantee Policy that defines partial guarantee coverage ranging from 5%–75%, based on borrower risk profile, sector exposure, and availability of third-party capital. Risk is controlled through exposure caps at sector, program, and financial institution levels, supported by structured credit assessments covering cash flows, value chain position, and institutional risk evaluation. Approval follows a tiered governance process involving management, the CEO, the Board Guarantee Committee, and the Board, depending on exposure size and complexity ongoing monitoring, periodic reporting, and annual reviews support portfolio quality, while limited investment in capital market instruments is permitted under strict conditions. The framework is subject to regular review to ensure continued risk alignment and portfolio discipline.

Market risk arises mainly from the Company’s investment portfolio, which is managed under an approved Investment Policy Statement focused on capital preservation, liquidity, and long-term returns. As of Dec'25, the Company held PKR 7.3bln in mutual funds classified at fair value through profit or loss, exposing it to market price fluctuations, while PKR 2bln was placed in savings accounts and floating-rate instruments, helping mitigate interest rate risk. The Company has no foreign exchange exposure as all operations are conducted in its functional currency. Overall, the market risk profile reflects moderate exposure to capital market volatility, partially offset by conservative liquidity management and a relatively balanced investment structure

The Company’s investment portfolio is composed of short-term, high-quality instruments, including mutual funds, Market Treasury Bills (T-Bills), Term Deposit Receipts (TDRs), and related accrued income, with total short-term investments of PKR 7.3bln as of Dec'25. The portfolio is primarily allocated to sovereign securities and highly rated bank placements, supporting both capital preservation and liquidity objectives. The structure remains concentrated in short-duration instruments, ensuring ready access to liquidity while maintaining exposure to low-credit-risk assets. Overall, the investment approach reflects a conservative, liquidity-focused strategy consistent with key considerations in credit rating assessments.

The Company’s paid-up capital stood at PKR 7.9bln as of Dec'25 (Dec'24: 7.5bln), with PKR 2 billion allocated as Core Capital to absorb unexpected losses and support financial resilience. The remaining amount is designated as Risk Capital, which determines the scale of guarantee issuance. This capital structure provides a prudential buffer while supporting controlled business growth, reflecting a disciplined capitalization approach consistent with key credit rating considerations around capital strength and loss-absorption capacity.