The bitter truth

Most of the government officials are not very forthright or try to hide some unpleasant facts about their organisation when facing the Public Accounts Committee (PAC) of the Parliament of Pakistan.
It was, nonetheless, refreshing to see a change in such a mindset when R.A. Chughtai, President of Zarai Taraqqiati Bank Limited (ZTBL), admitted before the committee that corruption, nepotism and an ageing batch of officers had plagued his organisation and written off over Rs 4 billion loans to 101 industrialists only under circular No 29 of the State Bank of Pakistan (SBP).
Under the SBP circular of October, 2002, ZTBL had waived a total of Rs 4.460 billion of irrecoverable loans to 11,964 defaulters, out of which Rs 4.018 billion were owed by industrialists. According to Chughtai, corruption in his institution was an open secret. It was also a reality that ZTBL is in financial crisis and recovery rate in Sindh and Balochistan was almost zero. 35 percent of the bank's mobile credit officers (MCOs) were above the age of 45 years and unable to perform their duties on motorbikes.
They have internalised corruption at this age and preaching sincerity and honesty to them is like talking to a wall. He was helpless to transfer or fire corrupt officers who had been taking 10 percent commission on farm loans from the borrowers for decades and were now billionaires.
Once he tried to transfer 200 bad performing officers but faced tough pressure from influential people in the power corridor. "If I tell you the names of these influential people, you will be baffled", he insisted.
The President of ZTBL was also not happy with remissions announced by the government from time to time. From 1992 to 2005, the bank had paid Rs 21.70 billion in remissions announced by the government and an additional amount of Rs 11.7 billion has to be paid if remissions to defaulters in Tharparkar, Zhob (Balochistan), and the earthquake hit areas announced by the government recently have also to be paid.
The frequent announcement of remissions of loans had adversely impacted the recovery rate and the borrowers sat and waited for remissions instead of paying back their loans. While the ZTBL President narrated his ordeal, PAC was quick to advise him to refrain from increasing the interest rate from the existing 8 percent, to reduce the annual operating cost of over Rs 2.5 billion.
He was also told to arrange credit cards for farmers to save their time and allow them to buy seeds, fertilisers etc on their own choice instead of the bank's agents who often sold substandard items.
R.A. Chughtai's unusually bold comments on the performance of his own organisation before the PAC, in our view, are very incisive and thought-provoking. In a way, they tell the real but sad story why our public sector organisations are sick to the core and unable to survive and deliver in a competitive environment.
Also, it is not difficult to see why a change is not possible unless there is a dramatic shift in the present environment. It also goes to show how nationalised institutions have been robbed and ruined by the influential and mighty in the country as well as their staff.
The bitter truth is that these institutions have become a yoke around the neck of the nation and are stinking. Coming back to the ZTBL, from all indications it is practically an insolvent institution. Chughtai has exposed the real situation in his organisation which should be alarming enough for the government to take notice and act. We would be happy if somebody is listening but, alas, persons like Chughtai are usually forced to quit sooner rather than later.
This "bank robbery" is also very well known to the State Bank. However, the central bank, instead of censuring and stopping unhealthy activities at the ZTBL, has not only kept silent but has continued to provide additional finance to the institution which in all likelihood is never going to be repaid. We believe there are a few things which need to be done immediately to save the situation.
The President or the Prime Minister must tell the government functionaries and ministers of the Cabinet to stop interfering in the affairs of the ZTBL and let Chughtai (or a new President) run the institution independently and come up with a proper financial restructuring programme. Shift of the head office from the capital to some other place may be helpful in this context.
The announcement of remissions for political mileage must be stopped forthwith, otherwise recovery rate will never improve. Also, the privatisation of ZTBL is a must to enhance efficiency, stop outside interference in its affairs, improve its financial health and reduce its dependence on the government and the State Bank. Public sector organisations are notorious for such traits that can easily sink even the best of institutions.