MUZAFFARABAD, May 20: The Azad Jammu and Kashmir (AJK) finance department has disagreed with a proposal from the region’s trade and industries department to write off more than Rs53 million lent by the state-run Small Industries Corporation (SIC), asking for recovery of the amount in accordance with the rules and relevant agreement, it has been learnt.

The matter will come up for final decision before the AJK cabinet, which will meet here on Wednesday with Prime Minister Sardar Attique Ahmed Khan in the chair, sources told Dawn on Tuesday.

In a summary to the prime minister, the trade and industry department had maintained that the SIC was extending soft loans to unemployed but skilled persons before the October 2005 earthquake under “self-employment and craft development and improvement of marketing” schemes aimed at promotion of cottage industry.

However, the quake had badly damaged the business of borrowers and the SIC, facing great difficulty in recovering the loans, was under tremendous pressure to write off the borrowings like that of the AJK cooperatives department loans, the department had said.

However, sources said when the matter was sent to the finance department last December for its opinion, it had categorically disagreed to write off the loans and had instead directed that the lent amount should be recovered from the borrowers under rules and relevant agreement.

According to sources, till October 7, 2005, the total amount of loan extended in “affected districts” of AJK was Rs43.05 million and recovered amount by that time was Rs6.95 million. The principal amount to be recovered by October 7, 2005 was 36.094 million, while the mark up to be recovered by that time was Rs7.002 million, the sources said.

From October 8, 2005, to February 29, 2008, the recoverable mark up stood at Rs9.78 million, raising the total amount to Rs16.711 million, the sources said, adding that the total remaining recoverable amount was Rs52.805 million whereas the prepared handicrafts worth Rs236,975 were also outstanding.

In all, the total recoverable amount (including markup) was Rs53.042 million, which the trade and industries department wanted to be written off, the sources said.

It may be recalled that the present government has already written off the loans taken by different societies and individuals from the AJK cooperatives bank.