The last housing society that was expected to plunge into financial crisis, dragging commercial banks with it, was the quasi-public Islamabad Defence Housing Authority.
The latter has been operating in Islamabad Capital Territory and areas of Rawalpindi district since 2005. But poor business and management practices, including outsourcing the acquisition of land to private third parties has trapped the DHA in a debt of Rs12bn owed to local and foreign banks. One of these banks, the Askari Commercial Bank, like the DHA, is an arm of the military's Army Welfare Trust. Unable to pay up, the Islamabad DHA is seeking not only a two-year moratorium on payment of mark-up and the principal loan amount, but also a waiver of the interest rate. Both requests, say banking experts, go against the rules of the State Bank of Pakistan. The concerned banks should ensure that whatever measures they decide on to resolve the crisis should be in accordance with the SBP's prudential regulations. The DHA has already been criticised for its commercial advantage in the market, because other housing societies — including government societies — are registered under the Cooperative Societies Act, whereas the DHA has been granted preferential powers. What will not be tolerated is the exemption of Islamabad DHA from financial liability and judicial accountability.
The military has come to be regarded as more efficient in administration and management than civilian bodies. But the present crisis may dent that image, particularly when concern about transparency in the DHA's dealings with private third-party entities had been expressed earlier by Transparency International Pakistan. The latter had insisted that the DHA implement the Public Procurement Regulatory Authority rules. An inquiry into the authority's financial affairs undertaken by the defence ministry or GHQ could clarify matters and help repair the image damage suffered by the military in general and the DHA in particular.
