An extensive audit conducted by the Auditor General of Pakistan (AGP) has uncovered financial irregularities, governance lapses, and systemic mismanagement worth over Rs10.2 billion at Zarai Taraqiati Bank Limited (ZTBL), one of Pakistan’s largest state-owned agricultural lenders. The findings, covering the financial year 2023–24, highlight deep-rooted weaknesses in credit oversight, loan recovery, and institutional accountability across multiple tiers of the bank’s operations.
According to the audit report, ZTBL failed to recover billions in loans extended under various agricultural credit initiatives, including government-subsidised schemes designed to support farmers and rural enterprises. Out of the total irregularities, the audit identified Rs6.8 billion in unrecovered loans from defaulters, many of whom had pledged assets and collateral. Despite these guarantees, the bank’s management reportedly delayed or neglected to initiate timely recovery actions, allowing borrowers to default without consequence.
In addition to non-recovery, the report highlighted Rs1.26 billion in unauthorised loan renewals and irregular rescheduling of defaulter accounts. These actions were allegedly carried out without fresh credit evaluations, approval from the Board of Directors, or compliance with the State Bank of Pakistan’s (SBP) prudential regulations. The auditors described these renewals as clear violations of lending standards and corporate governance protocols, suggesting a pattern of leniency and internal procedural breakdowns.
The AGP’s findings also pointed to irregularities in several subsidised financing programmes, including the Kisan Package and Kissan Dost Scheme. Loans totalling Rs923 million were reportedly disbursed without verifying key borrower details such as land ownership, identity documents, and project feasibility. In some cases, disbursements were linked to incomplete documentation or fake CNICs, raising concerns about fraudulent activity and misuse of public funds.
Moreover, auditors flagged unjustified loan write-offs amounting to Rs563 million, which were granted without approval from the bank’s board. The report stated that these write-offs appeared arbitrary and lacked justification, reflecting “weak internal controls and a disregard for financial discipline.”
Further scrutiny revealed missing documentation and unverified advances worth Rs341 million, where key loan files, collateral records, and repayment agreements were absent from branch archives. The audit also identified operational irregularities of Rs290 million in areas such as procurement, vehicle purchases, and branch renovation projects, all executed without following competitive bidding procedures or obtaining proper authorisations.
The report was equally critical of ZTBL’s internal audit and risk management divisions, which failed to flag early signs of loan defaults or credit quality deterioration. It observed that delayed and inaccurate data submissions from the Agricultural Credit and Risk Management departments hindered effective decision-making. The bank’s Board of Directors was also criticised for its continued inaction on recurring governance and compliance lapses, despite repeated audit observations in previous years.
Notably, the Departmental Accounts Committee (DAC) has yet to convene meetings to address ZTBL’s audit findings, despite repeated reminders issued between November 2024 and January 2025. This lack of follow-up, the AGP warned, poses a serious threat to the sustainability of agricultural credit operations and could undermine the financial health of one of Pakistan’s key rural development institutions.
In its recommendations, the audit urged a comprehensive, high-level inquiry to identify officials responsible for poor loan scrutiny, unauthorised financing, and negligence in recovery operations. It also called for the implementation of stricter governance mechanisms, enhanced internal controls, and transparent reporting systems to restore accountability within ZTBL.
The findings underscore the urgent need for reform within Pakistan’s agricultural financing system, particularly as small farmers and rural entrepreneurs continue to rely heavily on institutional credit for their livelihoods. With over Rs10 billion in irregularities exposed, the case of ZTBL serves as a cautionary tale on the risks of weak oversight in public sector banking.
Follow the PakBanker Whatsapp Channel for updated across Pakistan’s banking ecosystem.