The Public Accounts Committee of the National Assembly has raised serious concerns over escalating loan defaults and weak recovery performance at Zarai Taraqiati Bank Limited, citing a Rs9.179 billion impact on the national exchequer during 2022.
The issue surfaced during the committee’s examination of audit findings, which highlighted a sharp increase in the number of Special Asset Management defaulters. According to the audit briefing, SAM defaulters rose from 196,930 in 2021 to 221,736 in 2022, indicating a widening stress in the bank’s loan portfolio. Over the same period, the total defaulted amount surged from Rs44.464 billion to Rs53.64 billion, underscoring mounting repayment challenges.
The committee was informed that recoveries fell significantly short of assigned targets, resulting in a Rs9.179 billion gap. Officials disclosed that 1,601 SAM defaulters did not make any payments during the period under review, further deepening the recovery deficit. Members of the PAC questioned the effectiveness of internal monitoring systems and field-level follow-ups in ensuring repayment compliance, particularly in high-risk segments.
Regional data presented during the session revealed that recovery performance in the Quetta, Karachi and Lahore zones stood at only 16 percent of outstanding amounts. Lawmakers expressed concern over the persistently low recovery ratios in major operational regions, calling for improved enforcement strategies and enhanced accountability mechanisms within the bank’s management structure.
The audit briefing also highlighted irregularities linked to fraud and forgery cases amounting to Rs1.25 billion, which were reported to the State Bank of Pakistan during the 2022 audit cycle. According to the audit observations, certain employees were allegedly involved in fraudulent activities through the use of fake land documents to facilitate loan disbursements. The committee was told that management failed to recover the misappropriated amounts, compounding financial losses.
PAC members emphasized that as a state-owned agricultural lender, Zarai Taraqiati Bank Limited carries a critical mandate in supporting rural credit and agribusiness financing. However, they noted that persistent governance lapses and inadequate recovery controls risk undermining both financial stability and public trust. The committee stressed the importance of strengthening verification processes for collateral documentation, particularly land records, to prevent further misuse.
The findings have drawn attention to systemic weaknesses in credit risk assessment and post-disbursement monitoring. With default volumes climbing and recovery performance lagging, the financial strain on the bank could translate into broader fiscal implications, especially if recapitalisation or provisioning requirements increase.
Lawmakers urged the bank’s leadership to enhance internal controls, digitise land verification mechanisms, and adopt more rigorous audit trails to reduce the likelihood of forgery-related fraud. They also called for clearer timelines on recovery actions and disciplinary measures against officials found responsible for procedural lapses.
The PAC concluded that safeguarding public resources requires tighter oversight of state-owned financial institutions and transparent reporting on recovery efforts. As scrutiny intensifies, the spotlight remains on Zarai Taraqiati Bank Limited’s ability to contain defaults, pursue recoveries, and reinforce governance standards in line with regulatory expectations.
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