Central bank chief agrees to share list of borrowers with the committee in in-camera meeting  

An undated image of the State Bank of Pakistan (SBP) building. — AFP

ISLAMABAD: The Public Accounts Committee (PAC) Wednesday directed a forensic audit of $3 billion soft loans extended to various companies and individuals during the PTI government. During the committee meeting, Governor State Bank of Pakistan Jameel Ahmed agreed to share the list of borrowers in an in-camera meeting.

The soft loans of $3 billion were extended during the Covid pandemic.

Chairman Noor Alam Khan chaired the committee meeting. The finance secretary and governor State Bank attended the committee meeting.

It was disclosed that during the PTI government’s tenure, textile, cement, tire and auto industries took $3 billion in loans under the refinancing scheme at a 5% interest rate.

The committee constituted a committee comprising representatives of the Ministry of Defence, the Ministry of Commerce and the Auditor General’s office to investigate the matter.

Noor Alam Khan directed the State Bank of Pakistan to share the list of borrowers with the committee in an in-camera meeting within three days. He said on April 19, the State Bank of Pakistan had been asked under Article 66 of the Constitution to furnish the record of loans given to 620 people but it was not given. The PAC chairman inquired if the loan extended at five percent had benefited the economy.

PAC Member Barjis Tahir said the names of 620 beneficiaries should be given to the committee. The finance secretary said it was a refinance scheme and it was the State Bank’s mandate, as it had implemented the scheme through the commercial banks and this information was between the bank and client.

He told the committee that the scheme was launched in March 2020 after the Corona pandemic and this scheme was for one year first and it had no foreign currency exchange component. The scheme was for the industrial sector and import of machinery and it was revised to five percent. “More than 85 percent of lending is from the private banks. Of this, 42 percent of borrowers are from the textile sector,” he told the committee.

“We are worried because most of the companies do not return loans and open companies with new names,” said Noor Alam. Jameel Ahmed said the State Bank had the list of borrowers but the loan details were confidential between the banks and customers. He told the committee that Rs394 billion had been disbursed so far under the scheme. He made it clear that the loans had been disbursed in rupees.

He further told the committee that in this scheme, the government and State Bank did not do any risk sharing and commercial banks lent to clients at their own risk. He told the committee that at the time the scheme was launched, the interest rate was 9 percent and was later reduced to 7 percent. “This scheme was used only for the purchase of machinery,” said the SBP governor.

Noor Alam Khan inquired whether this policy was made by the State Bank or the government and why the names of these companies could not be disclosed. The State Bank governor replied that a refinance scheme could be given under the State Bank Act and if a scheme involved government risk sharing, then its approval was sought. “We can give a briefing on the benefits of this scheme,” he said.

Noor Alam said the representatives of commerce, planning and defence ministries should be included in the investigation team. The committee ordered a forensic audit of a $3 billion dollar loan and directed that a representative of the defence ministry be included in the inquiry. The SBP governor suggested that instead of making the list of borrowers public, it would be appropriate to hold an in-camera briefing of the committee. The PAC chairman agreed to the proposal and decided to hold an in-camera meeting.