NPLs surge to Rs 494 billion in two years: Khar tells National Assembly

State Minister for Finance Hina Rabbani Khar on Monday informed the National Assembly that Non-performing Loans (NPLs) had surged by four percent or Rs 494 billion during last two years (2008-10) and that the government was not responsible for such highly significant increase in NPLs.
Minister of State however, did not give break-up of NPLs of public and private sectors and said they had reached 14 percent in 2010 as compared to 10 percent in 2008. A ratio of 20 percent was recorded during the 1990s, she added. In order to clarify government's position, said that 80 percent banks in the country belong to the private sector and loans were extended by them. However, if compared with other countries of the world, the statistics of NPLs were not unusual, she said.
The State Minister for Finance revealed this in response to a call attention notice regarding unprecedented rise, according to the movers, in NPLs of banking sector to Rs 494 billion at the end third quarter of current fiscal year. The minister said that the upsurge was due to prevalent circumstances in the country, as security risk owing to law and order situation, energy shortage and global economic meltdown were the few contributing factors.
When asked whether the government was going to write off these loans, Hina Rabbani Khar stated that there were two types of defaults: Transitory (due to prevailing situation) and Chronic (with no chance of recovery). The State Bank of Pakistan (SBP) provides the banks with rules for the business and the rest was to be done by themselves. Meanwhile, Defence Minister Chaudhry Ahmed Mukhtar told the house that Pakistan International Airline (PIA) had decided to reduce cancellation and booking charges.
The legislators, had demanded withdrawal of increase in the cancellation and change of booking charges by Pakistan International Airline (PIA) through a calling attention notice. Sira Afzal Tarar of PML-N contested the statement of the minister while informing him that PIA staff bargains over the cancellation and change of booking charges, which she claimed to have learnt. At that the minister said that he would conduct an inquiry of the matter and action would be taken against responsible in this matter.