LAHORE (January 03 2003) : State Bank of Pakistan (SBP) has developed a new set of guidelines in consultation with the banks and Federation of Pakistan Chambers of Commerce and Industry (FPCCI) regarding write-off of irrecoverable loans and advances.
According to a circular, these instructions/guidelines do not affect in any way the legal right of financial institutions to recover the written-off loans if they still wish to pursue them legally.
The irrecoverable loans have been allowed to be written off by the banks and non-banking financial institutions themselves with the express approval of their respective board of directors or their nominated committee.
Before allowing write-off, all liquid assets would be realised and sale proceeds, therefore, appropriated towards the reduction of outstanding liability of the borrower.
Before approving a write off proposal, the competent authority should ensure that for cases having outstanding amount of over Rs 2.5 million, the same have been audited by internal/external auditors.
The scheme issued by the banks/NBFIs based on these guidelines would be a one-time opportunity which will expire on April 14 next.