10 banks sign pact to create Pakistan Corporate Restructuring Company Ltd

Published January 11, 2020
Under the provisions of Corporate Restructuring Companies Act 2016 with an initial paid-up capital of Rs500 million, the banks have decided to establish the CRC. — Reuters/File
Under the provisions of Corporate Restructuring Companies Act 2016 with an initial paid-up capital of Rs500 million, the banks have decided to establish the CRC. — Reuters/File

KARACHI: The country’s 10 banks signed an agreement on Friday to establish Pakistan Corporate Restructuring Company Ltd (PCRCL).

Under the provisions of Corporate Restructuring Companies Act 2016 with an initial paid-up capital of Rs500 million, the banks have decided to establish the Corporate Restructuring Company (CRC) — first of its kind company in the country.

The shareholder agreement was signed by presidents and representatives from Habib Bank, National Bank of Pakistan, United Bank, MCB Bank, Allied Bank, Meezan Bank, Bank Alfalah, Bank Al-Habib, Habib Metropolitan Bank and Faysal Bank at the State Bank of Pakistan (SBP) headquarters.

The CRC will help the government revive sick industrial units.

The CRCs, under the CRC Act 2016, are empowered to acquire, restructure and resolve the non-performing assets (NPAs) of financial institutions and thereby reorganise and revive commercially or financially distressed companies.

The CRCs are specialised institutions with expertise in NPL resolution and corporate restructuring.

These companies through aggregation of NPLs will be well positioned to negotiate with sick units and finalise restructuring of loans from multiple lenders negotiating simultaneously with the borrower.

It is expected that the CRCs will evolve as vibrant economic agent, contributing towards the revival of sick industrial units and generating employment opportunities.

The total banking sector’s NPLs stand at Rs758 billion as of Sept 30, 2019. Total NPLs amount includes loans against such sick industrial units, which can be revived and rehabilitated, provided the NPLs are restructured promptly and the sponsors of sick units also inject fresh equity.

The Securities and Exchange Commission of Pakistan (SECP) has granted license to the PCRCL on Dec 31, 2019.

The SBP official appreciated banks’ supportive role of regulator in incorporation and licensing of the PCRCL and engaged with the federal government to introduce amendments in relevant laws and strengthen banking courts in order to help government agenda of achieving institutional reforms.

Published in Dawn, January 11th, 2020

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Kurram atrocity
Updated 22 Nov, 2024

Kurram atrocity

It would be a monumental mistake for the state to continue ignoring the violence in Kurram.
Persistent grip
22 Nov, 2024

Persistent grip

An audit of polio funds at federal and provincial levels is sorely needed, with obstacles hindering eradication efforts targeted.
Green transport
22 Nov, 2024

Green transport

THE government has taken a commendable step by announcing a New Energy Vehicle policy aiming to ensure that by 2030,...
Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...