The Presidents / Chief Executives,
All Banks / DFI’s

Dear Sirs / Madam,

NATIONAL DISASTER MANAGEMENT PROGRAMME

Under the aegis of the National Disaster Management System Ordinance 2006, a National Disaster Management Commission (NDMC) has been established as the highest policy and decision making body with National Disaster Management Authority (NDMA) acting as its executive arm to ensure the implementation of strategies and programmes. The NDMC has decided, interalia, to encourage the Financial Services Sectors and Local Capital Markets to develop schemes of financing disaster risk reduction measures by families and community organizations. (Details can be seen at www.ndma.gov.pk)

2. In such unforeseen circumstances banks / financial institutions are likely to face credit risk due to the inability of the borrowers to service their obligations in the aftermath of disasters. Hence in order to ensure the soundness of the credit portfolio coupled with the rehabilitation of the distressed borrowers, it is advised that appropriate disaster management system and procedures be developed by each bank / DFI latest by October 30, 2007, which should be, duly approved by the Board of Directors. A copy of the same may be sent to SBP as well.

3. It should be ensured while developing such systems and procedures that they must envisage appropriate remedial provisions like training and education of clients, inculcating the habit of savings, rescheduling of loan, use of insurance etc to enhance the repayment ability in disaster situations.

4. Please acknowledge receipt