LAHORE: Restructuring and bad loans recovery measures have brought the Bank of Punjab back on the growth path with the its capital adequacy ratio returning to positive and deposits base growing significantly, a top official said on Friday.
“The BOP will post the much better growth and performance for the financial quarter end December 2016,” Khan said, addressing a select group of reporters.
Responding to a question, he said the court of law is giving stays to the defaulters, which delayed the recovery from the non-performing loans. “It is our legal right to get justice and we are recovering the public money,” he added.
The BOP’s president said the recovery from defaulters can further be expedited with support from the National Accountability Bureau (NAB) and the Federal Investigation Agency.
The bank believes that a mechanism should be developed to ensure instant justice and quick resolution of matters. There should be a mechanism through which public money plundered by the willful defaulters is recovered and financial strength of the banking industry reinvigorated.
The bank filed a total of 2,538 recovery suits into the courts of law during the last six to seven years. Total 38 cases worth Rs44.8 billion have been forwarded to the National Accountability Bureau under sections 9 and 31-D of National Accountability Ordinance 1999 and notices to 24 defaulters for the recovery of Rs13.5 billion have also been sent.
However, in 64 cases amounting to Rs52 billion, the local courts have restrained the National Accountability Bureau, State Bank of Pakistan (SBP) and the BOP from taking action against the borrowers for the last five to six years.
All these cases are pending and the National Accountability Bureau and the State Bank of Pakistan (SBP) are reluctant to proceed with such cases.
A bank official said the interpretation regarding the court orders was misinterpreted and the public money has been stuck for the last seven years. No recovery can be made in such a scenario and the economy is also suffering, the official said.
Khan of Bank of Punjab, referring to a fraud case involving a steel mill, said the bank has so far recovered Rs5.8 billion, while cases worth Rs2.5 billion are in the court of law.
The State Bank of Pakistan appointed the two new directors of the bank, he said, rejecting an impression regarding the conflict of interest.
In the past, four directors of the have brought the Bank of Punjab had taken Rs20 billion concessional loans from the bank in violation of the regulations.
The bank’s non-performing loans surged to more than Rs80 billion.
“On the backdrop of negative media hype, massive withdrawal of deposits to an extent of over Rs50 billion was witnessed, which exposed the bank to liquidity issues,” said Khan.
The bank’s capital adequacy ratio was in negative 14 percent (minus Rs20 billion) against the standard 10 percent.
The bank’s capital adequacy ratio improved to 11.33 percent.
Khan said the Chief Minister of the Punjab never interfered into the internal matters of the have brought the Bank of Punjab during the last more than seven years.
“Recovery of inherited non-performing loans always remained the cornerstone of the bank’s strategy,” he said. For the recovery, the bank moved both the local and foreign courts.
Legal proceedings were also initiated for the attachment of liquid and other assets of defaulters held abroad, he added.
The Bank of Punjab’s deposits witnessed a hefty growth of 117 percent to hit Rs356.6 billion between 2009 and September 2015. The bank curtailed the cost of deposits to 5.32 percent from 10.89 percent.
During the said period, the bank’s investments mainly in the government securities tremendously grew 731 percent.
Advances portfolio was steadily built to Rs231.7 billion as on September 30, 2015, showing a rise of 54 percent over 2008.
The bank was also able to achieve 29 percent reduction in non-performing loans, which now stand at Rs57.5 billion.
Currently, the non-performing loans of the banking industry stand at around Rs630 billion.
The bank’s total assets grew to Rs455.7 billion, registering a growth of 145 percent over 2008.
The bank has also achieved the compliance with the minimum capital requirements.
Similarly, the Bank of Punjab’s net interest margin witnessed a growth of 615 percent over 2008 and reached Rs8.1 billion as on September 2015.
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The BOP has the largest lease portfolio in the country, supporting the Punjab’s initiatives for poverty reduction and uplifting of under privileged segments of societies. The bank has achieved a recovery rate of 99.9 percent in this portfolio.
Khan of the Bank of Punjab said the bank has also financed various initiatives of the provincial government, such as Quaid-e-Azam Solar and Orange Line projects.