Misuse
of loan proceeds especially their usage for speculative
activities enhances the level of risk in such loans and
consequently may result in loss for the lending bank.
The banks/DFIs are, therefore, advised to ensure that
loans are utilized for the purpose for which they were
acquired. In this respect, the banks/DFIs should be especially
mindful of the risks of diversion of loans to real estate
and capital markets for speculative purposes. Moreover,
loans obtained for Export Finance should be closely monitored
to ensure that they are not diverted to other than the
stated purpose.
2. Accordingly, the banks/DFIs are directed to take suitable
steps to check the misuse of loans including the following:
Other instructions on the subject will remain unchanged.
3.
Any violation or circumvention of the above instructions
by the banks/DFIs will attract penal action under the
Banking Companies Ordinance, 1962.
4.
Please acknowledge receipt.