PESHAWAR, April 11: The MMA-led NWFP government’s incentive package aimed at recovering Rs210 million bad loans from the liquidated Frontier Cooperative Bank’s defaulters by waiving the accumulated interest received negligable response, according to sources.

On Jan 17, the provincial finance minister Sirajul Haq announced the incentive package to waive Rs170 million interest payable over and above the Rs210 million principle amount by some 30,000 defaulters of the Frontier Cooperative Bank (FCB).

In an attempt to attract the FCB defaulters, they had been advised to pay the principle amount by March 31, to enjoy the waiver.

Out of the total bad loans of Rs210 million, the FCB’s liquidator — the provincial public sector Bank of Khyber — collected a paltry sum of Rs4 million.

Speaking to journalists at the press club here on Jan 17, the finance minister had said the “package would be a huge success as the defaulters were finding it difficult to clear their bad loans because of the high interest”.

According to sources, about 102 societies — involving a total of around 1,500 persons — have benefited from the waiver.

The Rs4 million principal amount paid by March 31 comprised compound interest of Rs8 million — double the actual amount.

Qazi Munirul Haq, the BoK’s acting managing director, who is looking after the FCB’s liquidation, said that the “relief package offered major incentives and some of the defaulters are still showing their willingness to pay their loans.”

Some other sources said that the finance minister was expected to extend the deadline by one more month. But this has not happened.

Apart from the Rs200 million federal government loan, a sum of over Rs70 million is to be paid to the staff of the bank, and Rs20 million to the NWFP government.

The authorities concerned have so far recovered Rs120 million from the defaulters by liquidating their assets and land mortgaged with the FCB against the loans taken from it.

The incentive package’s poor response is apparently a major setback in the NWFP government’s attempts to eliminate interest from society.