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Date Posted: 06:10:30 01/23/05 Sun
Author: JAVED
Subject: SCHEME FOR BAD LOANS


By Javed - August 2003ž-

READER Aftab Khan in Daily DAWN 27 May 2003 commented on State Bank’s recent circular extended upto June 30, 2003 advising Banks and DFIs to write off the loans following the Scheme announced. He says that IDBP made it a practice to feed data on hold along with some un-held or fake securities to obtain inflated valuation figures so liabilities could be settled on higher figures.

It is a hard fact whatever schemes one may introduce, whatever incentives government may give those who are not to re-pay never ever will pay except by those who from the very beginning of taking loans had in fact in mind to return it but for reasons could not. While nation has very proudly been apprised about 20 billion written off to “poor” during last 3 years have simultaneously been also warned to strengthen their hearts as a further 30 billion is to be written off in next three years which of course we the nation will pay through electricity bills, sales tax on medicines etc. With this news I was reading that Zarai Taraqiati Bank has arrested some 30 farmers who are defaulters of Rs. 6000 to Rs. 28,000/-.

My brother since graduation in 1985 never having got any service took a yellow taxi loan from National Bank of Pakistan Karachi. He timely paid some initial installments. All of a sudden he had to undergo a very serious piles operation which made him unable to sit properly for the next two months and he did not ply the taxi. He did not tell the family that he had no money to pay. As is the fate with all ordinary people that they are all “coward” my brother for the fear of having not paid did not bring the taxi on road. Family thought he was not plying due to his physical incapacity. However when real situation came to knowledge I approached the National Bank President through some recommendations that only late payment penalty be condoned and it be allowed to re-start paying installments afresh. My this request was well before the 1997 State Bank Incentive Scheme to defaulters. While I was issuing reminders over reminders the State Bank announced its 1997 incentive/amnesty scheme under which a demand notice was received mid August from the Bank showing Rs. 130,500 outstanding as Principal Sum plus different figures as mark up and other charges. At this time someone approached referring to my above application to the bank advising me to “bargain” when matter would be fully settled eg case wold be totally finished. Since as I belong to silent majority coward class I refused. Immediately after my refusal a revised Demand Notice from the bank came this time showing outstanding Principal at 140,000/-. I or my family has never worked in any bank but my general banking knowledge has officially in writing been appreciated at many higher levels. Mark up, interest, penalty, late fee, duty, surcharge, total outstanding can always get increased but this was my first ever knowledge ever “Principal” outstanding amount getting increased and that too just in 10/15 days. Right from National Bank President, Finance Division to Federal Ombudsman I struggled so hard to increase my knowledge as too how a “Principal” amount can get increased but I never ever got this mystery solved. It is a general belief that State Bank too played a great role in destruction of banking economy. Banks were sending it regularly statements of loans issued, loans remaining outstanding and picture was all clear to it but it remained silent. Only the other day a report on National Bank loans quoted one example NBP having given loan to a named company which company never existed in Pakistan. Years back if my memories are not failing me in this old age a banking court judge remarked it appeared the NBP had no interest in recovery of its loan (for obvious reason must be a case of bargaining) as NBP for the last 15 years had not attended the court.

Being a “Shareef Adamee” I paid the whole loan calculated by the Bank but those who were not to pay still have not paid and will never ever pay. But still I wish if some one could help me to know “how the principal” can get increased just in 10
days.

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