One of my relatives, who has decades of banking experience and is now retired, informed me about the billions of rupees stolen from the State Bank of Pakistan (SBP) in Karachi since the 1990s through SBP rebate and refund schemes.

The corruption operates as follows: local businessmen collaborate with SBP officials, and then the SBP announces a scheme offering free refunds to businesses. For instance, rebates might be provided on exports or payments for business demurrage or delays.

The local businessmen also negotiate with the SBP to secure a favourable profit percentage for banks, as the banks assist with all the documentation and even approve fraudulent documentation.

During the scheme’s validity, these businessmen, with the banks’ assistance, exploit the scheme to obtain free money through refunds and rebates. For example, one trader exported potatoes but declared them as gold, thereby collecting substantial refunds.

Each payment is approved and disbursed by the SBP, from which officials receive a share, banks take their percentage, and the businessmen rush to maximise their profits while the scheme is in place.

The scheme concludes quickly, and by the time government organisations and the SBP become aware of the corruption, the perpetrators are already initiating a new scheme.

This corruption must be stopped. Firstly, the State Bank of Pakistan should not be located in Karachi, where many of these unscrupulous businessmen operate. Secondly, Pakistan should not offer refunds or rebates on any schemes. These practices create additional administrative work, open avenues for corruption, and benefit only a few businesses rather than the wider population.

Thirdly, banks should not receive a percentage fee for any government scheme, as these costs should be borne by the businesses themselves.

Rebates and refunds should be reserved for new business sectors that the government aims to promote and should be granted for a maximum of three years. Any business unable to operate without such support is a loss-making enterprise and should not be sustained in a country with a population as large as Pakistan’s.

SHAHRYAR KHAN BASEER,

Islamabad.