State Bank of Pakistan has explained some facts about the written off loans and made it clear that it has never refused to give details to the Parliament in this regard.
SBP, in a statement the other day, said during debates on written-off loans arising in print and electronic media certain facts need to be put on record that would enhance the quality of such debates. Thus, enabling viewers/readers to analyse things in true perspective.
SBP always provided information on written-off loans to the Parliament. In fact, this information was always available publicly as it was mandatory for banks to disclose, as a part of their financial statements, the names of persons and amounts written off of Rs 500,000 and above every year.
The recent demand for information by the Senate was about the names of borrowers of Rs 5 million or more who obtained loans from a bank during the last five years along with the number of cases recovered and waived off.
SBP clearly responded that none of the loans was waived off by the concerned bank out of the loans of Rs 5 million or more disbursed during the aforesaid period.
Further, information about a number of loans disbursed by the bank during the last five years and recovery of loans was also furnished to Senate in consolidated form. However, the names of individual borrowers of that bank, who availed loans during last five years and no write off involved in these cases were not shared due to legal provisions of Section 33-A of the Banking Companies Ordinance-1962 and Section 9 of Protection of Economic Reforms Act 1992 which bar sharing of customers’ individual information.
Section 33-A of the Banking Companies Ordinance, 1962, titled as Fidelity and Secrecy, stipulates that (1) Subject to sub-section (4), every bank and financial institution shall, except as otherwise required by law, observe the practices and usage customary among bankers and, in particular, shall not divulge any information relating to the affairs of its customers except in circumstances in which it is, in accordance with law, practice and usage customary among bankers, necessary or appropriate for a bank to divulge such information.
Whereas section 9 of Protection of Economic Reforms Act 1992, titled Secrecy of banking transaction, says that secrecy of bonafide banking transaction shall be strictly observed by all banks and financial institutions, by whomsoever owned, controlled or managed.
The SBP wishes to make it clear to all that it strongly believes in maintaining transparency in its affairs and stands ready for any accountability by the representatives of public in Parliament.
Further, SBP has been and shall remain to provide all information permissible under the law.