KARACHI, Oct 10: While the financial health of the Industrial Development Bank of Pakistan (IDBP) continues to be precarious, around Rs82.524 million has been written off by the bank against the non-performing loans (NPL) of eight industrial units during the current year.

The bank suffered a net loss of Rs1.496 billion (before tax) during the year 2003-2004 as against Rs3.952 billion in 2002-03, depicting a decrease of Rs2.456 billion over the last year.

However, during the 291st meeting of the Board of Directors of the bank held some time earlier this year in Lahore several cases with regard to the long outstanding NPLs were put up before the board for the write-off.

It is pertinent to note that during the course of meeting Sh Manzar Alam, one of the directors of the IDBP, raised objection over the approval of write-off granted to M/s Fine Food Industries in previous board meeting.

He recalled that in the 39th meeting of the EC held on September 13, 2004 the case was discussed and it was deferred on the basis of personal information that the guarantors were well-known resourceful people, whereas the memo submitted to the board stated that the whereabouts of directors and guarantors were not known despite best efforts.

It was explained that the memo had already stated that none of the properties earlier declared by the guarantors were in their names. Also the notices served by the Sindh High Court were not received at the mentioned or declared addresses.

Upon this Sh. Manzar Alam pointed out that the said guarantors were in the process of negotiating a proposal with the bank, while the memo approved by the board in 290th meeting stated that the dealing office had tried its level best to locate the said director and guarantors but could not succeed.

The director also alleged that the information being submitted was not thoroughly screened and filtered resulting in lack of trust on the authenticity of all the information submitted to the board.

Taking serious note of the observations made by Sh Manzar Alam, all the directors of the IDBP present in the meeting insisted that this issue must be screened out by the management, an enquiry should be conducted and if any official(s) was found responsible for deliberate misinformation should be put to task by taking strict disciplinary action.

It was also decided that the IDBP managing director would personally look into the issue and fix responsibility on the concerned officer(s) and present report to the board. As a result of the heated debate it was finally decided that no write-off would be effected to M/s Fine Food Industries until next decision of the board.

Looking at the grave lapses the board observed that since all the decisions were being taken on the basis of information provided by the management, therefore, if any of the board’s decisions were found to be improper due to misinformation, the responsibility would be solely that of the management.

Even after taking note of such weaknesses in the IDBP’s management and the authenticity of the information on the basis of which all important decisions were taken the board approved the write-off for millions of rupees.

IDBP Chairman Naeem Iqbal informed the board that the ministry of finance had been informed about the serious liquidity crunch being faced by the bank and had requested for the issuance of a guarantee of Rs3 billion which was vital for the bank to stay afloat.

He further said that the ministry of finance acceded to the request and issued a guarantee against which State Bank of Pakistan had sanctioned a credit line of Rs3 billion, out of this Rs2 billion had already been disbursed to the bank.

Following outstanding NPL cases were written-off by the IDBP’s board in its 291st meeting: M/s Ashi Marble Company (Pvt) Ltd (Rs2.972m); M/s Rehman Ice Factory (Rs0.275 million); M/s Al-Abbas Ice Factory (Rs0.237 million); M/s D M Textile (Rs26.887 million); M/s Hurmat Publication (Rs0.371 million); and M/s Hayat Vinyle (Rs22.279 million).

While approving the arrangements of takeover of M/s Pakland Cement & M/s Saadi Cement by Dewan Mushtaq Group of Companies, in line with majority creditors, and also wrote off Rs17.762 million being markup for the period from 01.01.2002 to 31.05.2004 against TFC “A” for principal in respect of Pakland Cement Ltd. Similarly, the board also approved write-off of Rs2.608m being legal charges against M/s Jet Era Textile Mills subject to lump sum payment of Rs97.187m of their settled liability.

However, Sheikh Manzar Alam once again observed in the meeting that the list of cases should include more details like directors and securities. Upon this it was decided that details of these cases so required may be presented with memo, e.g. names of directors, details of loans and securities.