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State Bank clarification about Non-performing Loans (NPLs)

KARACHI (December 13 2003): The State Bank on Friday sent clarification regarding the write-offs of irrecoverable loans and advances to all banks and development finance institutions (DFIs).

“We have received some representations from the banks and DFIs requesting for an incentive on immediate repayment of settlement amount in lump sum instead of repayment in three years as stipulated in SBP guidelines,” said the SBP circular.

“It is clarified that banks and DFIs can provide some incentive to the eligible borrowers who are willing to immediately repay full settlement amount in lump sum, keeping in view net present value of future repayments,” the circular added.

The circular said that it should be clearly understood that the above incentive provided to the borrowers would not, in any case, be reimbursed by SBP.

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