The State Bank yesterday directed all banks and development finance institutions (DFIs) to continue with their policy of writing off loans, but gave some new instructions to make the process more transparent.
The State Bank issued two circulars regarding the write-offs, asking banks to consider scenarios where natural calamities impair prospects of recovery.
“Every reasonable effort will be made to recover the outstanding loan, advance or financing,” said the circular. However, in exceptional cases, such as widows and orphans, banks or DFIs may consider relaxation to this requirement under their policy, it added.
Write-off of loan, advance or financing or waiver, if any, in the names of directors, chief executives, sponsor shareholders of the bank or DFI or their family members will require prior approval of the SBP,” the central bank said.
