Who Owns Pakistan - Yimg

10, 1997, the Supreme Court observed that " there appears to be no statutory
rules or regulations or any expressed policy guideline issued by the State Bank
of Pakistan, regulating or controlling the powers of banks to write-off, reschedule
loans and interest which is being exercised by these banks, arbitrarily, without
keeping in view the commercial considerations".
The revival of sick industrial units is an important priority for Nawaz Sharif govt
and the reason for this priority is not difficult to understand if one goes through
the list of biggest defaulters in the country. How the concept of reviving sick
industries has evolved is itself a meaningful comment on how the system works
and how corruption breeds corruption?
The H U Beg committee granted relief to hundards of sick industrial units and
fathered the idea of another committee by recommending that relief be provided
by reducing or rescheduling the loans of hundards of sick industrial units, " on
case by case basis". This led to the creation of another committee by Pakistan
Banking Council, in 1987 to provide relief to sick units, on permanent basis.
In 1988, Pakistan Banking Council empowered the board of nationalized
commercial banks to write-off restructure loans up to Rs 1.00 million but loans
above 1 million were to be referred to PBC Committee. In 1991, during Nawaz
Sharif premiership, board of directors of all the financial institutions were
empowered to write-off any loan.
The meetings of Federation of Pakistan Chamber of Commerce and Industry
Committee (FPCCI) for revival of sick industries during second Benazir govt were
chaired by Asif Zardari and it was during this period that FPCCI proclaimed
proudly that it had managed the restructuring and rescheduling of 400 cases or
Rs 24 billion and advised sponsors of sick/closed units, " in their own interest" to
contact the federation and avail the opportunity of settling their cases with banks
to make their units operational". We have already seen pervious pages that
second Benazir govt scandalously wrote-off loans worth Rs 3,550 millions
including all the loans of Farooq A Sheikh, Chairman FPCCI committee for
revival of sick industrial units.
The practice of writing off/ rescheduling loans has become a big business. In fact
it is such a powerful and lucrative business that honest and professional bankers
were reluctant to talk against this evil. A senior banker from National
Development Finance Corporation (NDFC) who had done a comprehensive
study on the problem of loan default came all the way from Karachi to Islamabad,
to speak on the subject at Sustainable Development Institute (SDI) in December
1996 but on the condition that he would not be reported or quoted.
" The concept of bad loans is gone, we call them non-performing loans", V A
Jaffery, Benazir govt's advisor on Economic Affairs observed at a press
conference with bits of sarcasm and helplessness.
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