ISLAMABAD: The State Bank of Pakistan (SBP) has disclosed that around 48000 cases related to defaults and written off loans which collectively amount to over Rs421 billion have been pending in courts for years. The central bank also informed that a case related to written off loans was already pending at Supreme Court of Pakistan since 2015 despite the submission of a report by the inquiry commission formed by the court in this regard.
During the meeting of National Assembly’s standing committee on finance and revenue on Tuesday, the officials of SBP informed that after taking Suo Moto notice of the issue in 2007-08 Supreme Court had started an investigation into the issue but is still pending.
“Why is SBP not able to take action against banks with written off loans worth billions of rupees so far? Who allows the banks to waive off loans?” said Pakistan Muslim League Nawaz MNA Rana Muhammad Hayat Khan while asking SBP to share details about the written off loans.
Rana, who had moved the calling attention notice regarding inadequate laws for recovery of loans from defaulters including waived off loans by the government, claimed that a textile miller who owns Hameed Textile had got Rs650 million written off from the bank despite business still running as usual. He added that the mill owner has opened a company with six directors of his own family members. “This is only one example, similarly there are many defaulters who got loans written off worth millions of rupees,” he said.
The SBP representatives, however, said that loans are usually written off by the board of directors of the banks after considering the funds non-recoverable. “Board of directors of a bank has the final authority to decide about such loans,” they added.
The SBP officials also claimed that the banks were ultimate losers in such cases. “ Since the law has been amended four times to discourage waiver of loans, the borrowers are now reluctant to get loan written off as their names are officially published in audit reports as per the set rules,” they claimed.
Member of the committee Asad Umar, supporting Rana’s stance also asked SBP officials to share the detail of those who got loans written off and the criteria followed for the waiver. The committee later directed SBP to share details about defaulters and beneficiaries of written off loans worth a minimum of Rs20 million from 2001 to onward.
During the meeting, the committee also showed concerns about the status of China Overseas Ports Holding Company Pakistan (COPHC-Pakistan) which has recently signed a MoU with Pakistan to set up a facilitation office at Gwadar Port. Asad Umar claimed that the company has only one room office in Hong Kong besides the firm has not obtained NOC from Ministry of Interior during the past three years.
On its website (cophcgwadar.com), COPHC-Pakistan says it is “a branch company of COPHC which is an emerging and fast-growing company in Hong Kong”. That is the only thing the company has to say about its profile, background and key management.
The officials of Securities and Exchange Commission of Pakistan (SECP) said that the commission was looking into matters related to COPHC. They said the record of transaction worth $110 million in the company was received so far.
Asad Umar said the Chinese company was not in Pakistan to set up a shop but to hold business at Gwadar. Investigation about company’s origins and the profile was needed for security and transparency reasons.
According to a report, COPHC-Pakistan has not submitted its annual documents for FY17; nor has it submitted its annual accounts to the SECP for all the years since its incorporation in Pakistan in October 2014. Under Pakistani law, companies that have a capital of Rs10 million or more are required to submit their annual accounts to the SECP.
