KARACHI: The State Bank of Pakistan (SBP) has provided another facility to the corporate borrowers by reducing the time period for write-off loans from 15 years to 10 years to facilitate the corporate sector to improve its credit history.

“The reflection period of written off or waived loans and advances for corporate borrowers in the Electronic Credit Information Bureau (eCIB), or credit registry, has been reduced from 15 to 10 years,” the central bank announced through a circular on Thursday.

The move has brought our system in line with the international practice and provided a conducive business environment to boost economic activities besides helping to improve the country ranking in the Ease of Doing Business Survey conducted by the World Bank periodically, it said.

The eCIB is a repository of information about the credit history of borrowers of the banking system and is largely used by banks and financial institutions to assess the creditworthiness of borrowers. “This decision follows a detailed assessment of international practices,” said the SBP.

It has been a general impression that reflecting the negative history or write-off for a longer period might deprive the borrowers of a fresh start and would exclude borrowers from access to finance for longer periods (following the write-offs or waivers) regardless of the borrowers’ current financial performance and other favorable information.

Published in Dawn, November 13th, 2020