Loans WriteOffs

The State Bank informed the Supreme Court on Tuesday that commercial banks had written off loans of up to Rs256 billion of more than 669,000 people over a period of about 40 years.

After taking suo motu notice of press reports that the central bank had quietly allowed commercial banks to write off loans of Rs54.6 billion under a scheme introduced by former president Pervez Musharraf, the court had ordered SBP Governor Syed Saleem Raza last month to collect details of all loans written off since 1971.

Advocate Syed Iqbal Haider, representing the SBP, submitted a report before a bench comprising Justice Sardar Mohammad Raza Khan, Justice Chaudhry Ijaz Ahmed and Justice Mahmood Akhtar Shahid Siddiqui. He said the figures were provided by commercial banks after they had been informed about the order of the Supreme Court at a meeting held on Jan 2.

Of the amount written off from 1971 to 2009, Rs213.794 billion was of loans of Rs500,000 or more borrowed by 23,445 people. In the category, Rs11.2 billion borrowed by 1,424 people was written off from 1971 to 1996 and Rs202.5 billion due from 22,021 borrowers from 1997 to 2009.

Loans of less than Rs500,000 amounting to Rs42.8 billion borrowed by 646,374 people were also waived.

Advocate Salman Akram Raja informed the court that he was moving an application on behalf of the presidents of Habib Bank, United Bank, National Bank, Standard Chartered and NIB Bank to become a party to the proceedings.

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