Khurram Zafar has accused Meezan Bank Limited (MBL) for not releasing his company’s funds.
Zafar serves as the Country Director of 47 Ventures, an international venture capital fund that has invested millions of dollars in local startups
In a series of tweets, Zafar requested the Board of Investment (BOI) Pakistan, the State Bank of Pakistan (SBP) and Digital Pakistan to look into the matter.
“Dear Board of Investment, Pakistan our fund, 47 Ventures, has invested millions of dollars in local startups. Yet, the capital for our latest investment is being held hostage by Meezan Bank Ltd for 12 days,” added Zafar.
Dear @investinpak, our fund, @47_ventures, has invested millions of dollars in local #startups. Yet, the capital for our latest investment is being held hostage by @MeezanBankLtd for 12 days. Can you help? Details follow… @StateBank_Pak @DRezaBaqir @taidrus @DigitalPak_GoP 1/n
— Khurram Zafar (@kayzafar) May 31, 2020
He further elaborated that the ‘ordeal’ started nearly two months ago when they decided to re-up their investment in a promising, fast-growing health tech startup. While they worked on deal documents, they arranged for a bridge loan (interest-free) for the startup to ensure it kept the operations growing.
“The capital was received by Meezan Bank, Khayanban-e-Jinnah branch Lahore in start of April. Various documents about the loan were requested which were provided swiftly to the branch. After a month, the bank said that the money came from a source that is not an ‘eligible lender’” said Khurram.
“It has been nearly two months and the money hasn’t even been returned to the sender. The bank is sitting on it. Branch keeps passing the buck to corporate which despite assurances has not sent the money back. Meanwhile, company had to raise local debt to pay its bills,” alleged Zafar.
As deal documents for the convertible debt taxation were completed, their investment fund disbursed the capital (a large sum of foreign investment coming into a Pakistani entity) on May 17.
It was received by Meezan Bank on 19th. “It is May 31 today! ” he tweeted.
“The money has still not been credited to the company’s account. The documentation for the deal was requested by the bank which was furnished swiftly. Does the bank not understand the transaction? Is it waiting for the exchange rate to move favoribly? Does it not care?”
“After constant follow-ups w the bank branch, I wrote via WhatsApp to the bank president. He didn’t respond. I have then written to SBP on Sat & await their response. Meanwhile, the startup struggles! Morale of the team is affected. Customers & partners start growing doubts,” added Zafar.
Zafar stated that if this was a Singapore company, the money would have been credited the same day as it was received. “I know. Been there, done that. If you are serious about attracting investment in the country, please streamline these processes.”
Zafar also clarified that the delay was not because of the Anti Money Laundering compliance.
He said, “We have invested several times before. All documentation is provided every time. In fact, we invested in the previous round of the same company, through the same bank, from the same source bank & fund. It’s just incompetence or casual attitude toward plight of SMEs.”
In a recent update, Zafar got calls from both State Bank of Pakistan and Meezan yesterday.
“SBP has assured a follow-up and Meezan asked for yet more documentation. But the fact that the follow-up happened on a Sunday, I am hopeful things will move swiftly to a resolution,” he added.