Please refer to the BPRD Circular No.6 dated June 5, 2007 and BPRD Circular Letter No.29 dated November 21, 2013. In this context, it is clarified that in cases involving write-off of principal amount and/or debited mark-up/charges, the banks/DFIs are required to ensure that at least the minimum guidelines issued vide BPRD Circular No. 6 dated June 5, 2007, as amended from time to time are strictly followed.

2. For extension of the grant of financial relief in the form of reversal/waiver/remission of undebited mark-up/profit or other charges or any other financial concessions through rescheduling and restructuring of loans, banks/DFIs shall also develop well defined transparent policy and get the same duly approved by their respective Board of Directors (BOD). The BOD at their discretion may delegate adequate and appropriate powers in this regard down the line to the President/Chief Executive Officer and other senior officers of the bank/DFI as they deem fit. To ensure prudent management of write offs/waivers under delegated powers, effective internal systems and controls shall also be put in place.

3. The Para No. 4 (v) of BPRD Circular No. 6 dated June 5, 2007 is, hereby revised as under:-

“The write off of loan, advance or financing or reversal/waiver/remission, if any, in the names of Directors, Chief Executives, Sponsor Shareholders of the bank/DFI or their family members as defined in Sub-Section (ff) of Section 5 of the Banking Companies Ordinance 1962, shall require prior approval of SBP.”

4. It is further clarified that for the purpose of disclosure in annual financial statements under BSD Circular No. 4 of 2006, the entire amount of financial relief has to be disclosed as per present practice. Similarly, the banks / DFIs shall continue data reporting to eCIB in accordance with the data structure already provided for the purpose.

5. The Boards of Directors of the banks/DFIs shall ensure the transparency of the process so that loan, advance or financing is written off only when there are no realistic prospects of recovery.

6. The above instructions will supersede the instructions contained in BPRD Circular Letter No. 29 dated November 21, 2013.

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