ISLAMABAD: The Auditor General of Pakistan has found that Zarai Taraqiati Bank Limited (ZTBL) failed to recover Rs80.6 billion in non-performing loans (NPLs) and charged-off loans, pointing to weak loan appraisal, poor credit controls and ineffective recovery mechanisms.
Of the total unpaid amount of Rs80.6 billion, Rs26.98 billion relates to NPLs and Rs53.08 billion to charged-off loans. A charged-off loan is a debt that a lender writes off as a loss after the borrower has missed payments for an extended period, usually 180 days. Although removed from the lender’s books, the borrower remains liable for repayment.
According to the audit report for FY2024, ZTBL’s loan infection ratio stood at 44 per cent when charged-off loans are included in the unrecovered portfolio. This implies that for every Rs100 disbursed, the bank has been unable to recover Rs44. The report noted that this ratio is significantly higher than the industry benchmark of 7.2 per cent.
The audit further highlighted 25,613 cases amounting to Rs8.382 billion in which no recovery was made in 2024. It attributed this to weak credit appraisal and persistent gaps in credit risk governance, and called for a detailed review of provisioning adequacy and recovery performance.
The report also said ZTBL has shifted towards an investment-driven profit model at the expense of its core function of agricultural lending. It noted that 71 per cent of assets, or Rs414.616 billion, were invested in risk-free government securities, while advances remained stagnant at Rs109 billion. Around 73 per cent of interest income, or Rs81.747 billion, came from investments, compared with Rs29.505 billion from core agricultural lending. The audit observed that the bank had effectively prioritised lending to the government over farmers.
It further stated that ZTBL’s lending is heavily concentrated in one province. Five-year disbursement data from 2020 to 2024 shows that Punjab received Rs307.533 billion, accounting for 84.52 per cent of total disbursements of Rs363.394 billion. In comparison, Sindh received Rs34.882 billion (9.59 per cent), Khyber Pakhtunkhwa and the erstwhile FATA Rs14.564 billion (4 per cent), Balochistan Rs1.656 billion (0.46 per cent), and Azad Jammu and Kashmir and Gilgit-Baltistan Rs5.227 billion (1.44 per cent).
The report said this disparity, where one province’s allocation exceeds the combined total of the other four regions by more than eight times, raises concerns over equitable fiscal federalism. It added that under the State Bank of Pakistan’s Agriculture Credit Expansion Plan, ZTBL had a target of Rs102 billion for 2024 but achieved only 70 per cent, or Rs72 billion, in FY2024.
The audit also revealed that ZTBL management failed to implement a core banking system despite paying Rs24.75 million to an IT consultant aged 78 years. The consultant was appointed through a tailor-made advertisement in which the age limit had been omitted.
