ISLAMABAD, Feb 13: Eight nationalised banks and three state-owned development finance institutions (DFIs) wrote off Rs25.5 billion non-performing and irrecoverable loans over the past three years.
The National Bank of Pakistan (NBP) was on top of the list as it wrote off Rs10.63 billion, stated Minister of State for Finance Omer Ayub Khan in a written reply to the National Assembly.
The NBP wrote off Rs3.872 billion in 2005-06, Rs3.962 billion in 2004-05 and Rs2.798 billion in 2003-04. The volume of non-performing and irrecoverable loans of the NBP had considerably increased over the last two years.
The Industrial Development Bank of Pakistan (IDBP) stands second in the list. It wrote off over Rs5 billion. In 2004-05, the IDBP wrote off Rs2.976 billion. Last year, the bank wrote off 1.775 billion, which was one-third of what was written off in the year before.
In 2003-04, the volume of IDBP’s non-performing and irrecoverable loans was well under control -- Rs276 million. But it increased by about 12 times or 1,200 per cent in the last two years, bringing the bank on the verge of collapse.
According to another document provided by the finance ministry to the National Assembly Standing Committee on Finance and Revenue, the bank accounts as on the last day of June 2005 showed the IDBP required Rs27.99 billion for financial restructuring.
The government will now insert the money by waiving State Bank’s penalties amounting to Rs2.7 billion. But the audit has put the restructuring amount at Rs33.056 billion.
The government plans to inject a hefty amount to make the bank capitalise after incorporating it with the Securities and Exchange Commission of Pakistan as Industrial Development Bank Ltd (IDBL). The incorporation requires the IDBL to show an authorised capital of Rs6 billion and paid-up capital of Rs6 billion.
The State Bank is of the view that till the completion of the IDBL sale, the total restructuring cost will further shoot up to Rs34.517 billion, requiring a fresh cash injection of Rs7.503 billion by the government.
The IDBP was set up in Aug 1961 for extending credit facilities to the industrial sector. The government and the SBP together own about 93 per cent share of the bank. The provincial governments own only two per cent shares in the bank, while the remaining five per cent belongs to some public sector institutions.
The state minister said the Zari Taraqqiati Bank Ltd (ZTBL) wrote off Rs4.64 billion in the last three years. The bank wrote off Rs1.337 billion last year, which was almost half of what it wrote off the year before -- Rs2.631 billion.
In 2003-04, the volume of bank’s non-performing loans was considerably lower (Rs670 million) as compared to the last two years.
The Small and Medium Enterprises (SME) Bank wrote off Rs1.538 billion in three years. The bank wrote off Rs696.6 billion last year, Rs469.653 million the year before and Rs371 million in 2003-04.
The Bank of Punjab (BoP) wrote off Rs135.439 million. The Bank of Khyber wrote off 85.68 million in the last three years.
The remaining amount in the total write-off (Rs25.5 billion) was shared by two nationalised banks and three state-owned development institutions.
Omar Ayub stated that the banks wrote off loans and waived charges on the basis of transparent and non-discriminatory method, which was according to the merit of each case in the light of write-off policy guidelines approved by the board of directors issued by the SBP.
