The Corporate and Industrial Restructuring Corporation (CIRC), established in September 2000 to handle the cases of non-performing loans (NPL) of banks and financial institutions, is going to issue bonds worth Rs4.54 billion to United Bank Ltd (UBL).
Sources said these bonds, having maturity of 5 years, will be issued to UBL to settle the NPL acquired at the time of the bank’s privatisation.
The CIRC, according to latest audited accounts of the Corporation, has so far paid Rs10,056,248 in cash to UBL.
The external auditors of the CIRC, A F Ferguson and Company, chartered accountants, has reported that CIRC incurred ‘exchange loss’ of Rs53,916,192 due to conversion of settlement proceeds in US dollars amounting to Rs863.257 million in respect of two overseas (United Arab Emirates) non-performing assets (NPAs) acquired from UBL at a purchase price of Rs735.987 million.
The CIRC, which was established for a period of 6 years, is facing serious policy issues, which were not settled by the policy-makers of the Ministry of Finance.
The issue of bonds to the recently privatised Habib Bank Ltd is yet to be settled by the board of directors of the CIRC.
It has been proposed that official life of the CIRC may be extended without limitation of years as there are only two years remaining and a lot of issues like settlement of NPAs of HBL and other government-controlled financial institutions are pending.
They said Ministry of Finance is also going to transfer NPAs of all the commercial banks and DFIs to the CIRC, which would also require the extension of time.
The sources said present meagre strength of CIRC staff also has to be enhanced immediately for handling of all these cases.
They said besides this, the policy-makers are delaying the promulgation of amended ordinance of CIRC to accommodate the field realities of the recovery process of NPAs.
They said, at present, more than 200 recovery cases are pending before banking courts and high courts of the country, which are not going to settle during the remaining two years of the CIRC.
They said the CIRC, now being run on self-finance basis, would also need new funds to settle the NPAs worth more than Rs100 billion.