PAC seeks briefing on loan write-off

ISLAMABAD, Nov 21: The Public Accounts Committee (PAC) has summoned the governor of the State Bank and president of the National Bank of Pakistan (NBP) to brief it on Wednesday about their policy of writing off loans.

The committee expressed concern over the fact that numerous influential defaulters were rescheduling and taking new loans from the financial institutions with impunity.

Finance Secretary Tanvir Ali Agha said continuous intervention of the government in the affairs of the public sector banks was responsible for the chronic problem, which must be checked to save the institutions from the onslaught of wilful defaulters.

PAC member Syed Qurban Ali Shah said the NBP had written off Rs18 billion loans to the owners of a tobacco company. It was not clear from the NBP’s list of defaulters whether they had got loans from the National Development Finance Corporation (NDFC), the Industrial Development Bank of Pakistan (IDBP) or some other institutions now merged into the NBP, he said.He alleged that the owners of the company had taken loans of billions of rupees in the name of their employees and fake companies in the 1980s and later refused to pay back the loans.

They were arrested by the National Accountability Bureau (NAB) and then released mysteriously after agreeing to pay Rs1.2 billion, he said.

“Nobody knows how much they owed to the NDFC and how much was written off or waived in settlement with NAB. The committee should summon all details in this regard,” he argued.

The committee took serious notice of the NBP’s move of sanctioning a Rs410 million loan to a textile mill in 2000 in breech of procedure. The loan was provided by the NDFC.

“I wonder whether there is any law in this country to check defaulters and many industrial giants have been getting their loans written off over the past four years,” said member Rai Mansab Ali Khan.

Full Story: Dawn (22nd Nov 2006)

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