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Saturday, October 30, 2010
SC asks SBP to explain loan waive-offs in last two years
* Court directs all banks to join hands with SBP for recovery of waived-off loans
* Only 10 of 50 top loan beneficiaries appear in SC to defend their caseStaff Report
ISLAMABAD: A three-member Supreme Court bench, on Friday, directed the State Bank of Pakistan (SBP) to explain position of loans written-off during the last two years.
The bench, comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday, also directed all the banks to join hands with SBP to devise a strategy for recovery of waived-off loans. The court observed that loans of over Rs 54 billion were written-off during the last few years. The court inquired about those people who got their loans written-off during last two years. The chief justice noted reports indicate that most of the loans had been written-off by the Zarai Taraqiati Bank Limited (ZTBL).
The court was hearing a suo moto case initiated on news reports of Rs 54 billion loans write-offs. The SBP has written off Rs 256 billion loans from 1971 to 2007. Appearing on notice, SBP’s counsel, Syed Iqbal Haider, told the court that he did not have the latest figure of written-off loans but would provide them later. He placed before the court a letter written by the SBP’s Governor Shahid H Kardar, in which he assured the court of his full assistance in recovery of loans, but added that more loans were likely to be waived-off due to economic slump in the international market, declining growth rate of the domestic economy and the recent catastrophic floods.
The court noted that 50 top beneficiaries, who got their huge loans written-off, were summoned, however, only 10 individuals and companies mentioned in the central bank’s list appeared before the court. Most of them, who appeared, claimed that their loans were written-off legally. Salman Butt, counsel for REDCO, insisted that the group’s loans were written-off under BDP Circular 29. Salman Akram Raja, counsel for seven private banks, said the banks were ready to settle the issue of waived-off loans amicably. Asif Saigol, owner of Mohib Textile Mill, stated that although he had returned his loan on time, yet his mill was auctioned.
Barrister SM Baqir informed the court that Indus Sugar Mills had got Rs 820 million loans written-off in 2004, however, it paid the loan’s installment regularly until March 2003. Ali Zafar, counsel for Indus Sugar Mills, opposed the allegations, saying the loans had been written off under BPD Circular 29.
Addressing the SBP counsel, the chief justice said that the general public wanted the public money recovered. “The court will not steer you by holding your finger. Take steps by yourselves. Sorry to say (but) SBP seemed not interested in the recovery” he added. The court issued notices to all the respondents and adjourned further hearing until December 7.
Courtesy www.dailytimes.com.pk