The State Bank of Pakistan (SBP) directed banks to file recovery suits in the court of law for NPLs with an outstanding principal amount exceeding Rs. 10 million two years before considering the charge-off (losses).
The senior management of the banks shall ensure that efforts for recovery of the charged-off NPLs are not compromised in any case, a circular issued by the SBP stated.
Non-performing loans/finances (NPLs) of the banking industry presently include a considerable portion of fully provisioned legacy loans.
To address the issues concerning these legacy NPLs, banks are allowed to charge off the fully provisioned corporate/commercial and Small & Medium Enterprises (SMEs) NPLs. Such charge-offs shall not constitute any financial relief and banks’ rights to recover from their borrowers shall remain intact.
However, charged-off NPLs shall not appear on the bank’s financial statements and shall instead be kept in the memorandum accounts.
The Board of Directors (BoD) and senior management of banks shall monitor the progress of charged-off loans and recovery thereof as per the BoD’s approved policy for dealing with NPLs/charged-off loans.
Banks shall maintain proper records of such charged-off NPLs; continue to report such charged-off NPLs to e-CIB/private credit bureaus as overdue; and give disclosure of charged-off loans under a separate note in their financial statements.
The following cases shall not be eligible for charge-off:
- NPLs, if any, in the names of related parties, sponsor shareholders, directors, Chief Executive Officers, and key executives of the banks or their family members and politically exposed persons.
- NPLs under litigation involving any criminal proceedings.
Banks shall follow their BoD’s approved policies for charging off NPLs against consumer loans.
What about e wallets like jazzcash, easypaisa,smart qrza etc ??
I have heard that NPL has exceeded one trillion rupees. This defaulted loan is very big. No need to go into the controversy that why these loans are in default or who are people that have defaulted, reasons for default etc.
In business environment default happens. The worrying thing is that normal procedure have been taken against defaulters. Banks grant loans only against collateral of fixed/ current assets. In addition to that personal guarantees from borrowers are obtained. If banks take action against these defaulters then assets of borrowers should have been confiscated and sold by bankers. But this is not the case. Banks are pursuing such cases against defaulters for many decades. It hurts them to spend additional money to fight these cases.
SBP should take the blame for delay in recovery in defaulted loans.
Banks by selling confiscated assets recover part of their money and new buyers can start new business that will add to GDP and generate employment opportunities.
unko kon poochy ga jo 5 10% weekly charges aur max 2 months hony pr double ka triple
Loan Amount kr dete
is it all oky by govt to loot the people with hard earn money and 1000 gets 2000 so on
is it applicable for Microfinance banks as well?
Ok but the first such recovery suit should be against the State itself which has been piling up loans and loans for decades with no sign of ending this beggary at any stage.