ISLAMABAD: The State Bank informed the Supreme Court on Wednesday that a number of top business ventures had quietly managed to get over Rs47 billion of loans written off, on a stand alone basis, by commercial banks between 1996 and 2008.
Advocate Syed Iqbal Haider, the counsel for the SBP, submitted to the court two lists of top 50 beneficiaries of the loan write-off. The first list includes the names of companies and industries which got loans of Rs47.109 billion written off on a stand alone basis, and the other contains the names of those who got Rs15.556 billion of loans waived under BPD-29, a special banking circular.
Mr Haider later told Dawn that these were just sample cases and should not be considered as complete lists. He, however, said the second list was not absolutely correct and there were some anomalies in it. The lists have been submitted in compliance with the court’s earlier directives to the central bank to cite at least 10 cases between 1971 and 2009 to prove that loans had been written off after fulfilling banking rules and regulations.
A three-judge bench, headed by Chief Justice Iftikhar Mohammad Chaudhry, had taken 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.
Among the top 50 beneficiaries is Redco Textile Limited owned by Saifur Rehman Khan, former chairman of the Ehtesab Bureau. His brother Mujeebur Rehman Khan was director of the company which managed to get a Rs1.1 billion loan write off by the United Bank Limited in 2006.
Saddruddin Gangji and Hasham A.H. Gangji of the West Pakistan Tank Terminal (Pvt) Ltd got a loan of Rs1.9 billion written off by the Allied Bank Limited in 2005; Younus Habib, the main character in the Mehran Bank scam, got Rs2.4 billion waived by the Habib Bank Limited in 1997; Mohib Textile Mills (Pvt) Ltd of the Saigol family, got a Rs1.1 billion loan written off by the National Bank of Pakistan in 2002; Mian Muneer Ahmed of the Firdous Spinning and Weaving Mills Ltd’s Rs780 million loan was written off by the HBL in 2005; Bayindir Insaat Turizm Ticaret’s Rs734 million loan was written off by the ABL in 2008; and Glamour Textile Mills Ltd of Lahore got a loan of Rs533 million written off by the NBP in 2002.
The Supreme Court asked the SBP to direct all banks to serve notices to major borrowers who had got their loans written off.
Advocate Abdul Hafeez Pirzada, appearing as amicus curiae (friend of the court), said that about 38 banks were functioning in the country and they extended benefits to borrowers under different banking circulars. He deplored that while the banks were making huge profits the beneficiaries were multiplying their businesses on these loans.
“The total written off amount is now estimated to be around Rs300 billion and Rs50 billion was waived during the past one year alone,” he said. Mr Pirzada said that the statement of the Federal Board of Revenue chairman was on the record that banks avoided paying taxes by writing off these huge loans. These amounts were regarded as assets of banks and were taxable, he added.