LAHORE  - The Bank of Punjab, in two and a half years, has recovered around Rs4 billion in Taxi Loan Scheme, which is half of the amount of total funds allocated in 2011-12 Punjab budget for distribution of taxis among youth through interest-free loans.
The official sources in Bank of Punjab told The Nation that the bank has been recovering about Rs.200 million every month since the scheme launched in 2011 and the recovery ratio is 99.72 percent.
They said that the bank disbursed 20,000 vehicles, including 12,000 Mehran and 8,000 Bolan in the period of 15 months from 2011 to March 2013. They said that government allocated Rs.8b in the budget to bear the whole cost of the scheme, adding that the bank is getting 2pc service charges while kibor is being paid by the provincial govt. They said that the recovery will be completed in 6 years by 2018-19.
Responding to a question, the bank officials said that there is no risk in yellow cab financing as defaulted vehicles are being seized immediately through trackers. They said that the bank is charging the markup but not from the customers, rather the government is paying interest, which has been fixed on normal standard. They said that the BoP, which is the financer of the provincial governments ‘Self Employment Scheme, has launched the project, keeping in mind that nowhere in the world leasing has ever been failed. The financing of taxis in Punjab is absolutely viable and the bank has watched its interest fully, claimed the officials, who are supervising the taxi scheme project financing. They said that there is no risk of any default, as the defaulter cannot run because his/her vehicle is identified through tracking system and is brought into the bank custody due to non-payment.
The bank charged about Rs5,70,000 and down-payment of Rs96,000, as it purchased the from factory with concession of Rs20,000 per vehicle.  Responding to a question, they said the scheme draws no parallel to the yellow cab scheme launched by the Nawaz Sharif-led government in 1992-93.
They said that financing of taxis in Punjab is absolutely viable and the bank has watched its interest fully. They informed that around 750 taxis’ owners (5 per cent of total taxis) attempted to alter their vehicles but the bank notices immediately and fined them up to Rs10,000 each to stop this trend.
To a question, officials said that some vehicles were also damaged in accidents while few were stolen but as they were ensured, bank avoided the losses in this regard.
“It is crime if the vehicle is not used for commercial purpose as in this way no employment will be generated, which is the actual aim of the plan.
The old scheme provided no self-insurance cover, and in case of death the bank had to lose while in the current scheme, every provider of the car is under the cover of self-insurance. So, in case of any mishap, the insurance company has to pay the whole amount and the bank would not have to suffer loss in any case.”
Under the old yellow cab scheme of 1993, around 65,000 vehicles, including 35,000 taxis, were provided on 10 per cent down-payment with a 10 per cent mark-up. The old scheme provided a large number of luxury vehicles to the people, as most of them were imported from Korea, wasting huge amount of foreign exchange and providing no benefit to local auto industry. More over as those were luxury vehicles they were not used for commercial purpose, so no employment was generated, resulting into burden on the financer.
In the present scheme no luxury vehicle was included, besides they were not imported and manufactured at local level, creating a considerable employment and saving huge foreign exchange which was wasted in the last scheme. The old schemes vehicles were fully loaded with accessories and AC facility and down-payment was just 10 percent, so most of the people sold their accessories to pay the down-payment.
On the other hand in present scheme only basic units were provided, having no facility of AC or any other luxury service with 100 percent extra down-payment as compared to the last scheme. The last scheme had no tracking system in the vehicle while the bank in present scheme has installed the multi purpose tracker in the cars. Due to this system there is no risk of theft.