In pursuance of Prime Minister’s announcement of above Relief Package and subsequent release of budgetary allocation by the Ministry of Finance, Government of Pakistan on account of Total Write-off of Loans in Malakand, Swat, Buner and Chitral Districts, following procedure has been devised for reimbursement of write off of loans outstanding as of December 31, 2009 against the borrowers of said Districts:-

A) Scope & eligibility criteria

i) Banks, DFIs and MFBs shall write off the entire loans outstanding as of December 31, 2009 of the borrowers of Malakand, Swat, Buner and Chitral Districts.

ii) Banks, DFIs and MFBs shall bear the cost of such write offs to the extent of amount held into provision against NPLs and interest in suspense account, while the rest of the cost will be paid by the Government of Pakistan as subsidy.

iii) Loans booked outside the Malakand, Swat, Buner and Chitral on behalf of businesses operating /located in these districts shall also qualify.

iv) Only principal amount of outstanding loans (Performing and NPLs less provisioning) as of December 31, 2009 shall qualify for subsidy.

v) Loans disbursed on or after January 1, 2010 shall not qualify for said relief. The amount of overdue / outstanding Mark up shall also not qualify for said subsidy.

B) Reimbursement of Subsidy

i) After internal approvals of write off of Total Loans in Malakand, Swat, Buner and Chitral Districts as per above guidelines the banks, DFIs and MFBs shall submit their claims to the office of SBP-BSC (Bank), Peshawar on prescribed format (copy attached) duly audited and authenticated by their Internal Audit up-to March 15, 2011.

ii) The amount reimbursed by SBP-BSC (Bank), Peshawar shall, however, be subject to on-site inspection by SBP’s Inspection Department and if any amount claimed found ineligible, the same shall be required to be refunded by the concerned institutions along-with a fine of 25% of amount reimbursed.

2. For smooth and timely implementation of above Relief Package, Banks, DFIs and MFBs are advised to stop recovery & accrual of mark-up of all such outstanding loans immediately and make all out efforts to publicize the Scheme through advertisements, banners and direct contact with the concerned borrowers.

3. The reimbursement of banks/DFIs/MFBs claims of outstanding loans as of December 31, 2009 as earlier reported to SME Finance Department, shall be full and final settlement of the borrowers’ liabilities and banks/DFIs/MFBs are required to release all securities/charges held against such loans and issue necessary clearance certificates to concerned borrowers soon after the receipt of funds from SBP.

Encl: As above