- Zafar added that it has been nearly two months and the money hasn't even been returned to the sender.
Pakistani entrepreneur Khurram Zafar, who serves as the Country Director of 47 Ventures, an international venture capital fund has accused Meezan Bank Limited (MBL) for not releasing his firm’s funds and has requested the Board of Investment (BOI) Pakistan to intervene into the matter.
“Dear Board of Investment, Pakistan our fund, 47 Ventures, has invested millions of dollars in local startups. Yet, the capital for our latest investment is being held hostage by Meezan Bank Ltd for 12 days,” said Zafar, while seeking help from the State Bank of Pakistan (SBP) and Digital Pakistan in this matter.
When contacted by Business Recorder, Khurram Zafar informed us that things are moving and hopefully will be taken care of today (Monday). "But we need to resolve the bigger issue. It has to be fixed for all entrepreneurs and not just for someone with influence and connections," he said.
Zafar added that the issue is prevalent across the entire banking sector, and does not pertain to Meezan Bank Limited alone.
Earlier, in a series of tweets, Zafar, who also serves as Director at the National Incubation Center, LUMS informed, that the ‘ordeal’ started nearly two months ago, “when we decided to re-up our investment in a promising, fast-growing health tech startup. While we worked on deal documents, we arranged for a bridge loan (interest-free) for the startup to ensure it kept the operations growing.”
“The capital was received by Meezan Bank, Khayanban-e-Jinnah branch Lahore in start of April. Various documents about the loan were requested which were provided swiftly to the branch. After a month, the bank said that the money came from a source that is not an ‘eligible lender’” he said.
Zafar added that it has been nearly two months and the money hasn't even been returned to the sender. “The bank is sitting on it. Branch keeps passing the buck to corporate which despite assurances has not sent the money back. Meanwhile, the company had to raise local debt to pay its bills,” alleged Zafar.
The entrepreneur added that meanwhile, “as deal documents for the convertible debt taxation were completed, our investment fund disbursed the capital (a large sum of foreign investment coming into a Pakistani entity) on May 17. It was received by Meezan Bank on 19th. It is May 31 today! ”
“The money has still not been credited to the company's account. The documentation for the deal was requested by the bank which was furnished swiftly. Does the bank not understand the transaction? Is it waiting for the exchange rate to move favoribly? Does it not care?” he questioned.
Zafar informed that he had tried to reach out to the bank and have also contacted MBL President, but has not received any response, therefore, he has written to the SBP and is awaiting their response.
Zafar also dismissed the assumption that the delay in releasing the funds is due to compliance with AML regulations. “We have invested several times before. All documentation is provided every time. In fact, we invested in the previous round of the same company, through the same bank, from the same source bank & fund. It's just incompetence or casual attitude toward plight of SMEs,” he said.
Meanwhile, Meezan Bank has said that they are looking into the matter, without delving out much detail. “Please inbox us your details. We will try getting the matter resolved,” said Meezan Bank Limited.