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Home / Business / $65m or Rs6.6b: ECC thumbs up to bailout for NBP Bangladesh
$65m or Rs6.6b: ECC thumbs up to bailout for NBP Bangladesh

$65m or Rs6.6b: ECC thumbs up to bailout for NBP Bangladesh

ISLAMABAD: Approving recommendation of the State Bank of Pakistan (SBP), the Economic Coordination Committee (ECC) of the Cabinet grant a bailout package to the tune of $65 million (Rs6.6 billion) to help the National Bank of Pakistan’s (NBP) Bangladesh.

The govt approved the bailout package after the Bangladesh branch’s equity eroded due to Rs14 billion losses caused by non-performing loans (NPLs). The NBP’s losses led to regulatory capital shortfalls, requiring the government to inject money to avoid winding up the bank’s operations in Bangladesh.

According to reports, the amount will be remitted to the NBP Bangladesh in two tranches till Jan 31, 2015. It is to be recalled that NBP President Iqbal Ashraf had informed the National Assembly’s Standing Committee on Finance that the bank would proceed against 26 top officials, including seven Bangladeshi nationals, for causing a loss of Rs14 billion.

Extended after 2003, the non-performing loans (NPLs) came to light in 2008 when a borrower defaulted on letters of credit. The NPLs originally amounted to Rs9.7 billion, but later went up to Rs14 billion. Some of the officials responsible for the loss had already fled.