ISLAMABAD, Feb 10: The management of the National Bank of Pakistan (NBP) has decided to wind up its regional office in Gilgit after revelation of a fraudulent loan scam involving millions of rupees.

An order issued by the NBP says that Gilgit has been reverted to the status of ‘sub-region’ under the bank’s federal capital region.The vice-president of regional office, Malik Mohammad Issa Khan, has been appointed recovery officer for the sub-region.

The bank had launched an investigation into withdrawal of Rs50 million by a man using the name of the Pak-China Sust Port Company and forging signatures of four members of the company’s board of directors in loan documents. He had also pledged collateral that did not exist.

The investigation, sources said, was also to look into alleged audit lapses.

According to the sources, loans of Rs880 million were sanctioned in the region on ‘fake or vague’ collaterals. The total amount of loan disbursed by the NBP in the region was around Rs1 billion.

Meanwhile, chief of the Northern Areas Chamber of Commerce and Industries Javed Hussain told Dawn that he had written letters to President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani seeking withdrawal of the bank’s decision to shift the regional office to Islamabad.

“Why should the NBP management punish the 3.5 million people of Northern Areas for an act of an individual,” he asked.

He said he had taken a delegation of the chamber to assure NBP president Ali Raza of help in recovering the loan and interest. He said the region badly needed loans and the bank’s regional office in Gilgit should continue to function.

“Cases of fraud have also been reported in other areas but no bank has closed its offices,” he said.

Pak-China Sust Port Company’s chairman Yuan Jianmin said no Chinese citizen or any other member of the company was involved in fraud and, according to him, the NBP management held the same view.

He alleged that the said fraud had been committed only by a former chairman of the company, Prince Salim Khan.