KARACHI - In a situation when existing recovery laws in the country seem ineffective for the creditors/lenders in retrieving outstanding loans, which had been written off under different categories, from the publicly announced defaulters, the banking sectors experts have suggested some ways, which in case of implementation, can boost the flow of recovery of such loans. According to media reports, the Governor State Bank of Pakistan is set to hold briefing with the government-opposition committees on January 22 (today) about the progress on the recovery of written-off loans by the SBP and all financial institutions including commercial banks and development finance institutions. These loans had been waived by the lenders on political ground. However, the official spokesman SBP told this scribe that the governors meeting with the said committees was not scheduled for January 22 (today), but can take place over the next couple of days. Experts blame that slower pace of execution in the disposal of cases pertaining to recovery of loans, credit and advances from the defaulters to creditors in the banking courts, malpractices being practiced by the bankers due to lack of any check and balance mechanism on the medium-tier bankers, involved in credit and financial businesses of the banks and absence of documented record of the property in the real estate sector are the major lapses, which are needed to be overcome on urgent basis. The recovery laws are good but there is proper professional and political will to implement such regulations. This is a very serious matter, which requires serious attention by the authorities, as the sluggish rate in the recovery ratio of the bad loans has been taking into account as a basic cause for increasing the volume of non-performing loans in the banking sector. In addition, despite effective credit risk management system, it poses a serous threat to the solvency of the banking industry, experts said. They recommend that the government should take the measures to accelerate the performance of the banking courts with regard to recovery cases. Moreover, the State Bank and Pakistan Banks Association must sit together and think over making any viable surveillance mechanism that could monitor the activities of the bankers, who are accountable for issuing credit and consumer loans and advances to the unable borrowers. It is necessary for the board of the bank to obtain clearance for the appointment of its banks president and director from the SBP. However, it shows that the appointment of medium-tier management including vice presidents and the heads of different departments deals with credit and advances issues, is not subject to a strict scrutiny by the human resource departments of the most of the bank. There is no self-regulation on the bankers, who also are responsible for giving loans to the borrowers with evaluating their assets and capability to pay off but do not consider the moral conduct of the borrowers for whatever the reason, the borrower is a industrialist or a bureaucrat due to his/her political influence. The experts informed that the recovery tribunals reported to have appeared mostly unsuccessful to handle such cases as the judgement of the cases take 7 to 10 years to come. This is evident from the fact that the government has formed a number of recovery tribunals, which work for recovery of loans and advances. Due to their negligence and ineffectiveness in their work the bank suffers the consequence of non-recovery, which reduces their profitability and liquidity. They said to announce jail sentence for the defaulters or carrying out their large scale of liquidations, auction sales was the temporary way to recover the loans. It must be mentioned here that the SBP as on October 24, 2010, had issued press release, saying that a meeting chaired by SBP Governor, Shahid H Kardar with all banks and development finance institutions, held at SBP premises to work out a strategy in response to the observations made by the Supreme Court regarding recovery of written off loans. The presidents and chief executives of banks had apprised the SBP Governor that banks had already issued notices to defaulters in line with the directives of the Supreme Court. In the meeting the banks representatives had informed that a write-off was undertaken after all remedies to recover were exhausted. They said that writes-offs were allowed by their Boards. The banks representatives informed the meeting that a number of prominent industrialists were made to suffer jail sentences and large-scale liquidations or auction sales were carried out. At the same time it was also pointed out that a substantial number of borrowers, 47,911, to be precise having loans of Rs 500,000 and below were allowed write-off under BPD circular No. 29. The bankers said that they would consult their key managements and the legal counsels and devise strategies in respect of write-offs and report to the State Bank. It was agreed in the meeting that the apex court must be facilitated by providing all necessary information/data and all efforts should be made to deal with respect to write-offs. The participants of the meeting were of the view that this initiative of the Supreme Court could be used as an opportunity and hoped that it would result in discouraging wilful defaults, improve recovery position and bring stringent laws on recovery. The participants of the meeting were of the view that the Supreme Court might be informed that the litigation process with regard to the recovery of loans took a lot of time. The experts also said during 1970-1980, banks in Pakistan were nationalised and borrowings were influenced by political families or political influence with sole purpose of taking money from business/projects. During this stage long-term projects did not exist. In 1980-1990, almost the same situation continued when misuse of World Banks supplier credit for project for industrialisation was on the rise.