Banking Sector restructured,Defer Rs910.7bln worth of loans

April 8, 2021

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According to the latest figures published by the State bank of Pakistan, Commerical banks, Micro Finance Banks and development finance institutions have postponed and restructured loans totaling Rs 910.7 billion a year to help borrowers overcome the economic difficulties of the Covid-19 pandemic.

The State Bank of Pakistan’s Loan Restructuring and Deferment relief was launched in March 2020 to facilitate restructuring and defer repayment of the loans. The plan aims to preserve the creditworthiness of borrowers and enable them to cope with temporary economic shocks.

The SBP’s loan deferral guidelines allowed banks to defer loan principal for up to 12 months, and borrowers continued to pay Interest amounts according to agreed terms. In accordance with the Loan Restructuring Plan, borrowers whose financial situation requires a deferral of the repayment of the principal amount of the loan for more than twelve months or a change in the conditions of repayment of the Interest SBP has relaxed regulations on the restructuring of these loans.

The loan deferral plan expired in September-2020 and the loan restructuring plan expired on March 31, 2021.

The bank said there were 657 billion rupees in deferred loans at March-2021 end, and financial institutions restructured loans of 253 billion rupees during the last one year.

Deferred and restructured loans include Rs 717 billion in corporate and commercial loans, Rs 121 billion in microfinance loans and Rs 27 billion in SME loans.

Financial Institutions received 1,883 million applications and approved 1,825 million applications with an acceptance ratio of ~97 per cent.

The restructured and deferred loans include Rs 121 billion in the Micro Finance portfolio, which is approximately 50 per cent of the MFI’s total net loan portfolio. Whereas Rs 717 billion of the total restructured and deferred amount out of Rs 910 billion is attributable to corporate and commercial borrowers.

The bank’s strategic planning data showed that the corporate loan portfolio in the banking sector represents 69.9 per cent of the total loan portfolio of banks, financial development institutions and microfinance companies.