Circular debt to be settled on 24th, banks informed

LAHORE: The Debt Policy and Coordination Office of the Ministry of Finance has informed 22 commercial banks about the government’s resolve to settle the circular debt issue by September 24 through a complex process of clearing all banking dues and then requiring the banks to buy Pakistan Investment Bonds from those payments.

A letter dated September 16, addressed to 24 commercial banks, states that the ministry has decided to settle the circular debt related banking facilities provided to Power Holding (PVT) Limited (PHL), National Transmission and Dispatch Company, Water and Power Development Authority and power distribution firms, inclusive of all accrued (due and overdue) mark-ups up to the date of the settlement.

This will be accomplished through the ministry of finance by providing credit to the borrowing entities for onward repayment to the relevant lending institutions.

The letter further says that following the settlement of loans and other banking facilities, the banks shall subscribe to an equivalent amount of Pakistan Investment Bonds (PIBs).

The banks that received this letter include Allied Bank of Pakistan, Askari Bank, Bank Alfalah, Bank Al-Habib, Bank of Khyber, Bank of Punjab, Citi Bank, Faysal Bank, Habib Bank, Habib Metropolitan, HSBC, JS Bank, KASB Bank, MCB Bank, National Bank of Pakistan, NIB Bank, Silk Bank, Soneri Bank, Standard Chartered Bank, Summit Bank and United Bank.

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