Rs280.9 bn loans written off from 1971 to 2010

ISLAMABAD: After giving a mandate to the inquiry commission to probe loan write-offs under the Panama Leaks, some relevant documents showed that Pakistan’s nationalised, commercial and development financial institutions have written off Rs280.903 billion loans from the year 1971 to 2010 for 912,259 borrowers, waiving off the principal amount of Rs123.784 billion, mark-up amount of Rs56.113 billion and others Rs101.005 billion.

The break-up of loan write-offs since 1971 to 2010 also showed that the banks and DFIs had themselves written off loans’ biggest chunk of amount to the tune of Rs208.44 billion in a bid to clean their balance sheets.

The data exclusively available with The News reveals that there were 887,195 borrowers who got loans less than Rs0.5 million and obtained benefits in terms of waiving off loans amounting to Rs61.333 billion. There were 25,064 borrowers who obtained loans above Rs0.5 million and waived off loans amounting to Rs219.570 billion, including principal amount of Rs75.534 billion, waive-off of mark-up of Rs44.758 billion and others Rs99.277 billion.

Under the classification of scheme-wise break-up of written-off loans by banks and DFIs disclosed since 1971 that the written offs under 1997 scheme BPRD-Circular Number 19 paved the way for loan write-off amounting to Rs5.404 billion including Rs1.075 billion as principal amount, Rs1.434 billion as mark up and Rs2.894 billion as others. The loan write-offs under the BPD-Circular 29 of 2002 resulted into waiving off total amount of Rs57.1 billion, including principal written-off of Rs18.541 billion, waive of mark-up Rs13.786 billion and others Rs24.772 billion.

Under loan write-offs as a result of transfer/sale of CIRC-Corporate and Industrial Restructuring Corporation, loans amounting to Rs7.477 billion were written off including principal write-off to the tune of Rs3.595 billion, waiver of mark-up Rs2.873 billion and others Rs1.008 billion.

The written-off loans under CRSIU — Committee for Revival of Sick Industrial Units — resulted in waiving off Rs2.478 billion including principal amount of Rs724.82 million, Rs639.81 million as mark-up waiver and others Rs1.114 billion.

The loan write-offs by banks and DFIs themselves paved the way for waiving off amount to the tune of Rs208.442 billion from 1971 to 2010 including writing-off principal amount of Rs99.846 billion, waiver of mark-up of Rs37.380 billion and others Rs71.216 billion.

The trends of Non-Performing Loans (NPLs) showed that total loan advances stood at Rs1,242 billion in 2003 that increased to Rs3,551 billion in 2009 and total NPLs went up from Rs211 billion in 2003 to Rs446 billion till 2009. The NPL versus advances increased from 17 percent in 2003 to 12.56 percent in 2009.

The recent data of SBP showed that the amount of NPLs went up to Rs605 billion till December 2015 but the pace of acceleration into NPLs got controlled. But it is worrying indicators that the NPLs were not coming down as being desired to ensure financial stability of the banking sector.

International as well regional trends on account of NPLs showed that in Bangladesh the loan amount of Rs27.360 billion (equivalent to Pak rupee) was written off in 2008-9, India Rs28.644 billion, Malaysia Rs240 billion, Indonesia Rs7.613 billion, South Korea Rs710 billion and Pakistan Rs27.305 billion in the same year.

When contacted for seeking comments on loan write-offs in the context of granting a mandate to the inquiry commission for probing loan write-offs, SBP’s spokesperson on Friday said the central bank would assist the inquiry commission for all legal and permissible aspects in terms of providing information as and when required by the commission.