NA panel stresses for swift formulation of ZTBL’s BoD

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Islamabad

National Assembly Standing Committee on Finance and Revenue on Tuesday directed the Ministry of Finance to formulate board of directors of Zari Taraqiati Bank (ZTBL) with immediate effect to ensure smooth functioning of the bank. The committee also directed the management of ZTBL to come up with a comprehensive revival plan to minimize losses and to ensure provision of maximum facilitation to small farmers by providing them loans on low mark-up rates.
The meeting which was held here with Faizullah in the chair, observed that without a board that is non functional for last two years, corporate good governance of the bank could not be ensured.
Member of the committee Qaiser Ahmed Sheikh pointed out that the mark-up rate of 18.5 percent on loans provided by the bank farmers was too high to be afforded by the poor farmers.
Briefing the committee, President ZTBL said the bank was not supposed to provide loans on concessionary rates and it was totally on commercial basis.
He said when the Karachi Interbank Offered Rate (KIBOR) was 6 percent, the bank was disbursing loans with mark rate of KIBOR plus 6.5 percent, while now the KIBOR is around 13.25 percent the bank is providing loans on mark up rate of KIBOR plus 5 percent.
However he said in order to facilitate the farmers, the bank was now taking measures to increase its profitability. He informed that as the bank had now received the Islamic Banking license, therefore he was planning to convert at least 100 branches to Islamic Banking to increasing deposits by the people.
After conversion of these Islamic bank branches, the bank would be able to provide loans on mark-up rates of as low as 9-10%, he informed.
Hina Rabbani Khar on the occasion said the agriculture sector’s growth had been on the declining trend for last 6-7 years and rates of cash crops of the country could not be increased during that period. Ali Pervaiz asked the ZTBL President whether the bank was in profit, in reply, he was informed that the financial situation of the bank was worst and it was expected that by end of current year, total losses of the bank would be accumulated to over Rs 8 billion.—APP