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P.O. Box No 4456
KARACHI

NBFIs Circular No. 18
11^th December, 1993

All NBFIs
Dear Sirs,

OVERDUES AND DEFAULTS – RECOVERY THEREOF.
State bank of Pakistan has taken a serious view of the increasing level of over dues and defaults by borrowers of NBFIs. While the ultimate responsibility in respect of the non-performing facilities lies with the responsibility in respective Boards of Directors on the NBFRIs, the State bank has decided, and accordingly directs as follows:-

(1) Every NBFIs Circular No. will furnish the State bank with a list of defaulters* having aggregate borrowing of Rs. 1 million and above as per the format at Annexure – I, on quarterly basis. The first of such statements shall be furnished within 15 days of the issue of this circular. The subsequent quarterly statements shall be furnished within a fortnight of the close of the quarter. Al list of rescheduled and restructured facilities would also be submitted to State bank in the similar manner us per the format at Annexure – II.

person, whether natural or juridical, shall be deemed to be a defaulter if he (or his dependent family members or concerns owned or controlled by him or concerns in which he or his dependent family members are major shareholders) has failed to pay off or liquidate any fiduciary obligation towards any NBFIs Circular No. in Pakistan as was agreed upon or required under the terms and conditions of availment of the financing facility or to do or perform an act agreed to or undertaken in writing to be done or performed by him and such failure has continued for a period of 365 days from the date on which he was required to make the payment or to do or perform the act.

(2) besides the measures presently instituted by each NBFI, the NBFI will lay down, within 15 days from the date of the issue of the circular quarterly recovery targets as a percentage of the overdue obligations for their respective NBFI and also for each branch or zone of Region, as the case may be, initially for three quarters starting from 31^st January, 1994. Thereafter recovery targets would be fixed for each quarter beginning from 1-10-1994 and the same communicated to the State Bank of Pakistan within a fortnight of the beginning of the respective quarter. Any default in compliance with this directive shall attract penal action under the Banking Companies Ordinance, 1962.

(3) A progress report on the recovery in relation to the targets shall be submitted to the State Bank on quarterly basis beginning from April, 1994. The NBFI will also be required to explain deficiency if any in meeting the targets and the strategies evolved with a view to ensuring achievement of subsequent targets.

(4) Wherever considered legally appropriate by the NBFI, cases of default may be referred to the Revenue Authorities for recovery as arrears of land revenues. The list of such cases and progress in recovery shall be sent to the state bank on a quarterly basis.

(5) The State Bank would soon send special inspection teams to the NBFIs with large defaults. The Head office of each NBFI shall at all times maintain necessary record of all defaulters of Rs. 10 million and above, and shall make it available to the special inspection teams of the State Bank as and when they visit the NBFI for the purpose.

(6) Each NBFIs shall nominate one Liaison Officer at head Office and on each at the Provincial/Regional Head quarters who will serve as a contact point for the State bank in respect of all matters relating to the defaults and recoveries. The name and telephone numbers of the Liaison officers shall be intimated to the State bank as early as possible.

Yours Faithfully,

(I.A. FAROOQ)
Director

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