i) All liquid securities/assets, as defined in Prudential
Regulations for Corporate and Commercial Banking, held
by bank/DFI under lien, pledge etc have been realized
and sale proceeds thereof have been appropriated towards
adjustment of outstanding amount of principal.
ii) Confirmation by the concerned official of the branch/office
duly countersigned by the authorized official(s) of
the office higher than the originating branch/office
that borrower or his guarantor has no known means of
repayment..
iii)
The borrower(s) has not created other business interests
and assets out of the non performing loans proposed
to be written off.
iv)
The borrower(s) is not involved in any criminal misappropriation
of stocks, movable and immovable assets or security
(ies).
v) The write off of loans/advances, if any, in the names
of Directors or their relative/dependent(s)/concern(s)
in which they have any interest of 5% or more and in
the name of Chief Executive of the bank/DFI shall require
prior approval of State Bank of Pakistan (SBP).
vi)
No write off will be allowed where forced sale value
of securities held, is more than the recoverable outstanding
amount. However, the said condition shall not be applicable
on the cases recommended/settled under any general incentive
scheme of SBP or such other Committee(s) as notified
by SBP or present Committee for Revival of Sick Industrial
Units (CRSIU).
vii) The write off proposal is duly audited by the internal
auditor (IA) of the bank/DFI. The IA shall clearly indicate
the deviation/irregularity, if any, from the approved
credit policy during the process of sanction, disbursement,
documentation, monitoring/supervision of loan/advance
and its underlying security(ies). The name(s) of official(s)
responsible for irregularities/lapses, which has turned
the loan/advance partially or fully bad/irrecoverable,
may clearly be spelled out along with action taken against
such official(s). It is clarified that IA would only
verify the facts and figures as put forth by the concerned
Department(s)/office(s) and need not give recommendation
or otherwise.
viii) The latest valuation of properties/stock/other
assets held by banks/DFIs as security for the loan/advance
shall be obtained, if not available on record, at the
time of write-off of loans, indicating clearly therein,
amongst others, the present market value as well as
forced sale value. The condition of valuation of properties/stocks/other
assets held as security for the loans/advances shall
be restricted to cases involving outstanding principal
amount of Rs 5 million and above and have to be conducted
through an approved surveyor on the list of Pakistan
Banks Association. The valuation of properties/stocks/other
assets for determining market and forced sale value
having outstanding principal amount of less than Rs
5 million may be done by bank/DFI itself as it deem
appropriate in a reasonable and transparent manner.
ix) For writing off of loans/advances, where outstanding
amount of principal is below Rs. 0.5 million, the clauses
stipulated at para 4(vii) and (viii) shall not be applicable.
The banks/DFIs while following clauses at 4(i) to (vi)
in said cases shall also obtain a joint certificate
from originating branch manager and an authorized officer
of the said branch duly countersigned by the authorized
official(s) of the office higher than the originating
branch confirming that no irregularity/deviation of
prescribed rules and regulations in the process of sanction,
disbursement, documentation, monitoring/supervision
of loans/advances and its underlying security(ies) has
occurred which has turned the loan/advances partially
or fully bad/irrecoverable. The name(s) of the official(s)
responsible for the irregularity(ies)/lapses may be
clearly spelled out along with action taken against
such official(s).