Pakistan's major bank loses PKR 215M under youth loan scheme

A major Pakistani bank has incurred losses of around PKR 215 million under a youth loan scheme, triggering concerns over the bank’s vetting of borrowers and lack of internal controls.

An audit of the National Bank of Pakistan (NBP) for the year 2024-25 revealed the bank had disbursed loans worth PKR 215 million to borrowers from January to June 2024 under the Kamyab Jawan youth empowerment initiative.

Most of the borrowers have defaulted willfully on their loans, according to the audit findings.

The NBP has since submitted the entire amount as claim to the State Bank of Pakistan (SBP) under the Credit Loss Subsidy Scheme.

NBP officials did not respond to repeated queries by Nukta regarding loan default.

The audit report made scathing remarks about the bank’s management, which failed to conduct proper creditworthiness assessments before issuing the loans. This oversight directly led to widespread defaults and loss of public funds.

The report cites Rule 5 of the Public Sector Companies (Corporate Governance) Rules, 2013, which requires board members to act with independence and objectivity in the best interest of the company — a rule the auditors believe has been flagrantly violated.

In response, NBP management claimed that 80 percent of the loan installments had been recovered, but no documentary evidence was provided to support this claim.

Repeated requests by auditors to verify this recovery, including formal reminders sent on November 25, 2024, January 6, and January 13, were ignored, as per the report. Moreover, the Principal Accounting Officer (PAO) failed to convene a Departmental Accounts Committee (DAC) meeting to address the audit’s concerns, compounding the lack of transparency.

A senior government official told Nukta that the default rate under the Kamyab Jawan scheme is only 3% and that the vast majority of borrowers are actively repaying their loans in installments.

The official further said that the NBP has kept the borrowers’ data strictly confidential, refusing to share crucial details even with relevant government departments.