February 8, 2003	Saturday	Zul Hijjah 6,1423

KARACHI, Feb 7: All commercial banks recovered Rs 17.2 billion in 18 months to December last year out of total loan defaults of Rs 127 billion. Defaulted loans are the loans that are overdue by one year or more.

Bankers say Rs 17.2 billion recoveries includes cash recovery as well as restructuring of the defaulted loans. According to the State Bank figures posted on its website the banks recovered more than Rs 2.7 billion in the last quarter of 2002. The pace of recovery has picked up as most corporates are bringing back part of the money they had put in foreign banks. This has raised their liquidity level and enabled them to clear their loan defaults.

Bankers say another reason for higher recovery is that they have become more flexible in restructuring the loans to create room for fresh disbursement of credit because the banks too are flooded with liquidity.

The SBP statistics show that state-run commercial banks namely (i) National Bank (ii) Habib Bank and (iii) First Women Bank made a total recovery of Rs 9.6 billion between July 2001-December 2002. The privatized banks i.e. (i) Allied Bank (ii) Muslim Commercial Bank and (iii) United Bank made a cumulative recovery of Rs 4 billion during these 18 months followed by local private banks whose combined recoveries stood at Rs 2.7 billion. Foreign banks recovered Rs 915 million worth of loan defaults during this period.

The statistics further show that specialised banks and DFIs (development financial institutions) made a total recovery of Rs 2 billion in 18 months to December 2002 out of total loan defaults of Rs 30.7 billion: Specialised banks recovered slightly more than Rs 1 billion and DFIs a little less than Rs 1 billion.

The loan defaults of Rs 30.7 billion does not include the defaults of Investment Corporation of Pakistan and National Investment Trust whose monitoring has been taken over by the Securities & Exchange Commission of Pakistan.