Circulars/Notifications -  
 BID Circular No. 2
September 3, 2001 


The Presidents/ Chief Executives of all banks.


Dear Sirs,
 

            As you are aware, the State Bank is required by law to submit to the Federal Government, a special report every year on cases of write off of loans, mark-up and other dues, or financial relief through rescheduling and restructuring of loans and subsidized loans provided by the banking companies, in which established banking practices or authorized procedures have been departed from with a view to causing wrongful loss to the bank or conferring wrongful gain on any constituent or such departure has caused wrongful loss to the bank or conferred wrongful gain on any constituent..


2. To meet the statutory obligation, the SBP has to conduct inspections and compile reports on regular intervals. It has been observed over a period of time that banks often fail to provide timely and complete information to the inspection teams which ultimately delays the preparation of write off reports. Although the banks have been urged by the inspection teams on various occasions to submit the information in a perfect and timely manner, but the efforts have not been proved successful.


3.In order to systematize the information regarding write off cases, it has been decided as under:-
i)Before allowing write off as per instructions in force, it should be ensured that all the files/papers relating to write off cases from sanction till write off are available at Head Offices/SAMG/SAMD.

ii)The annexed check list is invariably filled in and attached with each case duly signed by head of the SAMG/SAMD.

iii)The figures of write off reported in the Balance Sheet should not be at variance with the figures of write offs reported to SBP in Annexure “A”.


4.You are advised to bring the above to the notice of all concerned for strict compliance.

Please acknowledge receipt.

 

Yours faithfully,
(Muhammad Javed)
Director

     Encls:- Checklist 

C H E C K L I S T

 (To be  annexed with each write off case duly signed by the Head of SAMG/SAMD/ Write off Deptt.) 

Kindly arrange to furnish attested photocopies of the documents in respect of each written off case ( where applicable)

1 Is / are Borrower’s Loan application(s) available on record ? * Yes / No
2 Is / are original renewal sanction advice (s) available on record ? * Yes / No
3 Is / are there any enhancement (s) in loan facility available on record ? * Yes / No
4 Whether Credit Worthiness Reports on the Borrowers were obtained from banks /other financial institutions? * Yes / No
5 Is the nature of business available on record ? * Yes / No
6 What is the status of Business ? Sole Proprietorship / Partnership/ Private Ltd.Co/Public Ltd .Co. 
7 Are names and addresses of Owners/partners/Directors available on record? * Yes / No
8 Are the names of Guarantors with full addresses, their status and their worth at the time of sanction and at present available on record? * Yes / No
9 Is the mode of repayment of loan or repayment schedule available on record? * Yes / No
10 Is the valuation Certificate of properties/securities through bank’s approved surveyor / architect available on record? * Yes / No
11 Is legal opinion of the banks Legal Advisor regarding genuineness of the security documents available on record? * Yes / No
12 Is the report on the borrower’s borrowings from other banks/financial institutions called from (CIB) Credit Information Bureau of SBP? * Yes / No
13 Is the date and amount of last repayment available on record? * Yes / No
14 Are the reasons on account of which the loan became stuck-up available on record? * Yes / No
15 Are the details of outstanding against the borrowers i.e. principal, interest charged, Accrued Interest not debited, Penal interest, other charges and total available on record? * Yes / No
16 Are the details of recovery efforts made by the bank including necessary correspondence/legal notices/recovery suit/decree/execution petition and results thereof available on record. * Yes / No
17 Are details of compromise made outside the court and reasons therefor available on record? * Yes / No
18 Is the date on which the compromised amount paid by the borrower available on record? * Yes / No
19 If the borrower has become bankrupt, are the details of court proceedings and action taken by the bank available on record? * Yes / No
20 If the borrower is dead, are the following  details available on record:-
ii.                   Heirs left behind
iii.                  Assets left behind
iv.                 Valuation of Assets
* Yes / No
21 Is the write off note approved by the competent authority together with resume of the loan case available on record? * Yes / No
22 Are the details of action taken against the delinquent officials, available on record? * Yes / No
23 Whether the borrower is still in business? * Yes / No
24 In case of hypothecated stocks, were the stocks sold and proceeds thereof  credited  to the loan account? * Yes / No
25 Whether the securities pledged/hypothecated were released to the borrower, if so, Is the date of release available on record? * Yes / No
26 Whether property/Properties mortgaged were redeemed to the borrower, if so, is the date of redemption available on record? * Yes / No
27 Whether periodical stock reports/insurance cover of hypothecated/pledged stocks were obtained ? * Yes / No
28 Whether physical verification of the hypothecated/pledged stock was carried out periodically? * Yes / No
29 Whether debit balance confirmation was obtained from the borrower, if so, is a copy of the same available on record? * Yes / No

 * Kindly indicate the reference where the requisite information is available

NB                    Those banks which are preparing and submitting scrutiny sheet marked Annexure-II as proposed vide BID Circular No.1/91 dated 6-4-1991 with  each write – off case will not be required to fill up the Check List.

 (Signature of Head of SAMG /

 SAMD / Write-off Deptt)

       
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