SBP says Rs 193.4 billion loans written off in 12 years: Supreme Court to offer single opportunity

Wednesday, 23 December 2009 17:56

SBP Diary - SBP News

ISLAMABAD : The Supreme Court on Tuesday expressed readiness to face any blame by holding looters of national exchequer accountable after it was informed by the State Bank of Pakistan (SBP) that loans of Rs 193.404 billion to 19,711 borrowers were written off during the last 12 years (1997-till date) by 37 banks, public as well as privately-owned, in the country.

According to the details submitted by SBP, Habib Bank Limited (HBL) is on top of the list with Rs 49.63 billion written off, followed by United Bank Limited (UBL) with Rs 38.45 billion, National Bank of Pakistan (NBP) Rs 28.54 billion, Allied Bank Limited (ABL) Rs 12.17 billion, MCB Rs 11.83 billion, Industrial Development Bank Rs 11.79 billion and Zarai Tarraqiati Bank Ltd had written off Rs 8.76 billion. Chief Justice Iftikhar Muhammad Chaudhry observed that resistance will come from all vested interests in the country but we will go on, and the responsible would be taken to task. While requesting the SBP Governor to furnish the list of written off loans since 1971, the court directed the banks operating in the country and the SBP to join hands and come up with proposals for the recovery of the looted money. Recommendations for recovery will also be examined by the court and if needed a commission should be established by the court to examine the matter, said the Chief Justice in the order. We will give a single opportunity to bank loan defaulters to pay back loans that were written off, otherwise we will decide the matter, warned the Chief Justice. The Chief Justice made the letter written recently by MQM chief Altaf Hussain demanding the SC to take action for recovery of national money as part of the suo motu action that was taken by the court in 2007. Lauding the demand of Altaf Hussain, the Chief Justice remarked that political parties were urging the courts to recover the looted money. A three-member bench

comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Anwar Zaheer Jamali and Justice Khilji Arif Hussain adjourned the matter for February 2. After the preliminary hearing of the case the court questioned the SBP whether circular 29 of 2002 (which wrote off Rs 54 billion to 49,000 people) is not discriminatory as the benefit extended to those who had political or other influence and the facility was denied to those who respect the law.

 

The court questioned whether loans that were written off from 1971 till to-date were on the basis of such circulars, and directed the SBP to submit all such circulars if invoked and define their validity with respect to the Article 25 of the Constitution that deals with equality of citizens . Syed Iqbal Haider represented the SBP whereas Abdul Hafeez Pirzada who earlier was appointed as an amicus curie (friend of the court) requested to plead the case. Haider said that a list of loans written off since 1971 was being prepared and he would submit the same within a week. Iqbal Haider and Khawaja Farooq counsel for NBP and UBL were asked whether they were in favour of continuation of loan write off. The court urged Haider to answer its question as a friend of the nation instead of a counsel for any party. Responding to the query, Haider said that any favour granted illegally should be recovered. Pirzada contended that Rs 54 billion were written after the SBP Circular 29 of 2002 and nothing is more immoral than that circular. It played havoc as it ignored those 92 percent who clear their liabilities. He questioned: Why didn t the banks liquidate their securities prior to writing off their loans. The court had taken a suo motu action in pursuance to a note put up by Justice Syed Jamshed Ali to examine the legality of writing off loans on the basis of some media reports regarding SBP s approval of a scheme to quietly write off a total of Rs 54 billion owed to commercial banks by business concerns run by some top politicians and others. The report that appeared in the media is based on a secret report to the Public Accounts Committee (PAC) of the National Assembly. It submitted that 50,000 people including politicians, civil and military business concerns and business tycoons of Karachi, Lahore and other cities had been favoured through the scheme and their outstanding loans were written off in 2002. Instead of launching an effective campaign for the recovery of non-performing loans (NPLs), it said, the SBP issued an incentive scheme circular 29 to the banks/DFIs in October 2002 for waiving off the NPLs of organisations showing loss for the last three years or more after dividing them in three categories. Category A included NPLs of up to Rs 0.5 million, category B from Rs 0.5 million to Rs 2.5 million and category C for writing off a loan of more than Rs 2.5 million. The politicians and the big business concerns exploited the third category to get billions of rupees outstanding against them written off. The circular 29 of the SBP had provided a bid to write off 25 percent loan from the settled amount with a direction to pay 10 percent in advance but in cash, and submission of the remaining amount in instalments within a period of three years.

 

BANK -WISE SUMMARY OF WRITTEN-OFF LOANS OF RS.0.5 MILLION AND ABOVE (From 1997 to 2009)

------------------

COMMERCIAL BANKS

==================

(Rs In million)

==================

Amount Written-Off

==================

Sr.No Name of Bank No of

Borrowers Principal Mark-up Other Total

==================

1. Habib Bank Limited 5728 10383.377 344.196 38899.76 49627.333

2. United Bank Limited 3157 10767.872 3457.523 24225.233 38450.628

3. National Bank of Pakistan 1554 8215.379 4234.226 16096.582 28546.187

4. Allied Bank Limited 510 5150.357 982.3143 6038.038 12170.709

5. MCB Bank Limited 876 5987.225 673.589 5178.628 11839.442

6. Industrial Development Bank 465 7305.0663 4144.974 349.083 11799.123

7. Zarai Taraqiate Bank Ltd 541 2603.55 6150.721 15.25 8769.521

8. NIB Bank Ltd 545 2524.631 4492.626 293.177 7310.434

9. Citi Bank NA 2691 4029.704 1539.696 0 5569.400

10. Standard Charted Bank 1743 2172.881 929.886 0.657 3103.424

11. RBS Bank Limited 838 1641.157 450.145 44.127 2135.429

12. Faysal Bank Limited 51 782.211 359.631 738.265 1880.107

13. Askari Bank Limited 45 1286.394 586.078 0 1872.472

14. Samba Bank Limited 52 1203.148 73.426 0.269 1276.843

15. SME Bank Limited 170 269.356 902.05 0.37133 1171.777

16. Bank of Khyber 27 491.035 634.808 0.055 1125.898

17. Silk Bank Limited 93 569.654 378.452 0.259 948.365

18. Bank Alfalah Limited 99 739.645 93.052 0 832.697

19. Bank of Punjab 93 363.951 90.503 91.268 545.722

20. Habib Metropolitan Bank 62 308.258 111.242 0.005 419.505

21. Mybank Limited 77 253.486 116.732 1.455 371.673

22. Bank Al-Habib Ltd 25 276.501 75.553 0 352.054

23 Meezan Bank Limited 4 118.316 156.908 36.697 311.921

24. Deutsche Bank Limited 20 215.997 48.122 0 264.119

25. Atlas Bank Limited 69 195.345 63.552 2.935 261.832

26. HSBC Bank Limited 10 175.886 79.422 0 255.308

27. KASB Bank Limited 30 64.679 28.24 0.18 93.099

28. Soneri Bank Limited 19 27.726 0.967 47.611 76.304

29. The Bank of Tokyo 3 60.42 0 0 60.420

30. Albaraka Islamic Bank 8 18.609 2.433 0.068 21.110

31. First Women Bank Ltd 6 3.599 7.794 0.999 12.392

32. Punjab Provincial Coop. 2 0.549123 2.2731 0 2.822

33. Arif Habib Bank Limited 5 1.971 0.231 0 2.202

--------------------------------------------------------------

G. Total 19618 68207.935423 31211.3654 92060.97233 191480.272

==============================================================

 

 

 

BANK -WISE SUMMARY OF WRITTEN-OFF LOANS OF RS.0.5 MILLION AND ABOVE (From 1997 to 2009)

COMMERCIAL BANKS

======================

(Rs In million)

======================

Amount Written-Off

======================

Sr.No Name of Bank No of

Borrowers Principal Mark-up Other Total

======================

1. Habib Bank Limited 5728 10383.377 344.196 38899.76 49627.333

2. United Bank Limited 3157 10767.872 3457.523 24225.233 38450.628

3. National Bank of Pakistan 1554 8215.379 4234.226 16096.582 28546.187

4. Allied Bank Limited 510 5150.357 982.3143 6038.038 12170.709

5. MCB Bank Limited 876 5987.225 673.589 5178.628 11839.442

6. Industrial Development Bank 465 7305.0663 4144.974 349.083 11799.123

7. Zarai Taraqiate Bank Ltd 541 2603.55 6150.721 15.25 8769.521

8. NIB Bank Ltd 545 2524.631 4492.626 293.177 7310.434

9. Citi Bank NA 2691 4029.704 1539.696 0 5569.400

10. Standard Charted Bank 1743 2172.881 929.886 0.657 3103.424

11. RBS Bank Limited 838 1641.157 450.145 44.127 2135.429

12. Faysal Bank Limited 51 782.211 359.631 738.265 1880.107

13. Askari Bank Limited 45 1286.394 586.078 0 1872.472

14. Samba Bank Limited 52 1203.148 73.426 0.269 1276.843

15. SME Bank Limited 170 269.356 902.05 0.37133 1171.777

16. Bank of Khyber 27 491.035 634.808 0.055 1125.898

17. Silk Bank Limited 93 569.654 378.452 0.259 948.365

18. Bank Alfalah Limited 99 739.645 93.052 0 832.697

19. Bank of Punjab 93 363.951 90.503 91.268 545.722

20. Habib Metropolitan Bank 62 308.258 111.242 0.005 419.505

21. Mybank Limited 77 253.486 116.732 1.455 371.673

22. Bank Al-Habib Ltd 25 276.501 75.553 0 352.054

23 Meezan Bank Limited 4 118.316 156.908 36.697 311.921

24. Deutsche Bank Limited 20 215.997 48.122 0 264.119

25. Atlas Bank Limited 69 195.345 63.552 2.935 261.832

26. HSBC Bank Limited 10 175.886 79.422 0 255.308

27. KASB Bank Limited 30 64.679 28.24 0.18 93.099

28. Soneri Bank Limited 19 27.726 0.967 47.611 76.304

29. The Bank of Tokyo 3 60.42 0 0 60.420

30. Albaraka Islamic Bank 8 18.609 2.433 0.068 21.110

31. First Women Bank Ltd 6 3.599 7.794 0.999 12.392

32. Punjab Provincial Coop. 2 0.549123 2.2731 0 2.822

33. Arif Habib Bank Limited 5 1.971 0.231 0 2.202

--------------------------------------------------------------

G. Total 19618 68207.935423 31211.3654 92060.97233 191480.272