March 21, 2003	Friday	Muharram 17, 1424

LAHORE, March 20: Different nationalized and private banks and DFIs are said to have received some 11,000 requests involving an outstanding default amount of about Rs26 billion under the State Bank’s scheme for the write-off of irrecoverable loans and advances.

Sources in the industry told Dawn on Wednesday that the banks/DFIs had reported to the central bank to have settled bad loans to the tune of about Rs4 billion under the scheme. However, they did not give the number of the cases settled.

The sources said the dispute resolution committee constituted by the central bank earlier this month on the persistent demand of the businessmen to settle any issue cropping up between the banks and DFIs and their borrowers had been referred some 154 complaints by the central bank for its consideration and decision.

They said most complaints filed by the borrowers related to the Forced Sale Value (FSV) of the projects having multiple bank borrowings as the “lead bank in every case wants to be repaid its loan in full leaving the others aside instead of sharing the amount on a pro rata basis with them”.

Secondly, the banks are asking the borrowers for three years post-dated cheques for repayment of the loans though the central bank guidelines do not contain any such provision, directly or indirectly.

Thirdly, the banks have indicated to the borrowers seeking settlement of their accounts under the scheme would not be provided working capital for their projects (for which the loans had been obtained). “This would lead to the closure of the industrial units because of non-availability of working capital which, of course, is not purpose of the central bank scheme and is against its spirit,” the sources said.

The central bank had issued guidelines on the scheme in its Circular BPD-29 issued on October 15 last year for writing off irrecoverable loans and advances.

The last date for availing the scheme is April 14, 2003.

The central bank scheme originally addressed those projects whose loans and advances have been classified as loss for three years. The scheme was amended later on to include the borrowers of the restructured and rescheduled loans and advances to allow them to get their debts settled if they have defaulted on their fresh payment schedule.

A previous such amnesty for the defaulters introduced by the central bank in 1997 had yielded the banks and DFIs Rs5 billion in cash and rescheduling of the remaining NPLs.