PESHAWAR, June 8: The Managing-Director of the Bank of Khyber, Dr Munir Ahmad, on Tuesday acknowledged that a bank defaulter had been made the head of Islamic banking but said that the official had rescheduled his loan and agreed to return most of it.

Dr Ahmad faced a volley of questions at a press briefing held to highlight the performance of Islamic banking since November last when it was initiated as part of the manifesto of the MMA government to introduce interest-free banking in the province.

"Yes, he was a defaulter," Dr Munir Ahmad said of the head of Islamic banking division in the BoK. But he said that the official had since rescheduled his loan and repaid much of his loan.

The head of the Islamic banking division in the BoK, M. Asad, defended his position at the briefing and said that he had taken the loan while running a business in Karachi but later faced problems with repayment while closing down the venture.

When asked whether he had declared being a loan defaulter at the time of his appointment at the bank in which the provincial government had a major share, Mr Asad claimed that he was not a loan defaulter at that time.

Earlier, Mr Asad made a brief presentation on the performance of the Islamic banking initiative and claimed that the BoK had been able to earn a modest profit. Later, Dr Munir rebuffed critics and said that the decision to introduce Islamic banking in the BoK was not taken in a hurry and that it was the result of a year-long planning.

"Unfortunately, the delay was caused in the permission by the State Bank of Pakistan," he said. He also denied any political interference in the BoK and said that the German Bank, DEG, was fully satisfied with the performance of the bank and fully supported its initiative.

He said that the bank's rating had also improved which showed its overall good performance. The BoK MD, however, said that certain 'black sheep' within the bank who, he alleged, had doled out loans in the past, were not letting the bank work properly and were out to derail his efforts to put the bank on the track.

He said that he was collecting evidence against such elements and promised to expose them soon. He maintained that he enjoyed full authority and the confidence of the chief minister and the senior minister.

He said that the government planned to shed some of its share in the open market and hoped that it would get Rs600 million to Rs700 million premium on account of the bank's new improved reputation.