KARACHI, May 29: The Corporate and Industrial Restructuring Corporation (CIRC), during the last two years, has examined 719 non-performing assets (NPAs) and mediated in direct resolution of 174, involving a total outstanding amount of over Rs30 billion, official sources disclosed.

Furthermore, the corporation has completed acquisition proceedings of 277 cases and achieved 76 sales or settlements out of 89 auctions, a spokesman of the CIRC told Dawn on telephone from Lahore.

Presently, 262 NPAs are under resolution at banks, which is being actively monitored by the CIRC on fortnightly basis. Resolution period of a maximum of 90 days is allowed under CIRC ordinance and only upon failure of the banks to resolve within the given period, the corporation initiates its acquisition process.

The CIRC has to carry out its transaction at the lower of amount due from borrower minus provisions held by the bank or the “estimated market value” conducted by an independent evaluator, whichever is lower.

This provision has been made in view of the fact that over a period of time the banks have provided reserves against their NPAs which have been funded by the government and the surplus proceeds of auctions conducted by CIRC also go to the federal government.

The issue of low auction values is adequately answered by the fact that all CIRC auctions are transparent and accessible by anybody interested in purchase of an asset provided he or she is willing to put up the earnest money enabling participation in the auction.

Although CIRC has so far made only a very small dent in NPAs of banks and financial institutions but its establishment is a step in the right direction observed a multilateral agency in its report on operations of CIRC for the period Sept 2000-Dec 2002, the spokesman said.

Within the constraints of the size of its organization and complex and slow legal processes, it would not be fair to expect of CIRC to resolve decades of mismanagement of debts by the financial institutions in days, he maintained.

He admitted that the CIRC with its present structure appears ill-equipped to deal effectively with the issue and was not likely to fulfil its mandate within the remaining period without further strengthening.