NBP Under Fire over Rs 23.8B Credit to Hascol
Public Accounts Committee paused ruling on audit para involving National Bank of Pakistan-linked credit to Hascol, as investigators and stakeholders weigh in on sector-wide lapses and governance failures.
Islamabad: The Public Accounts Committee (PAC), chaired by MNA Junaid Akbar, deferred its decision regarding an audit observation on Rs 23.8 billion in loans extended by the National Bank of Pakistan (NBP) to oil marketing firm Hascol Petroleum Ltd (HPL). The delay follows an ongoing Federal Investigation Agency (FIA) inquiry, which PAC members said must conclude before formal action is taken.
According to FIA testimony, the investigation originated from a media report, not an official inquiry — prompting concerns about investigative procedure. The FIA representative disclosed allegations that NBP extended unsecured credit and that certain officials received kickbacks for approving questionable facilities.
Audit Finds Regulatory Breaches in Credit Decisions
The auditor’s report indicates that NBP’s Karachi Head Office disregarded prudential regulations in 2022 by issuing credit facilities without proper financial due diligence or appropriate collateral. This included early removal of security postures, and circumventing internal processes: a senior executive reportedly diverted the financing proposal away from the Investment Banking Group, breaking standard protocol.
Moreover, despite deteriorating oil sector profitability in 2018, NBP increased its Letter of Credit (LC) exposure from Rs 12 billion to Rs 18 billion. The bank also eased requirements like FPADs and restructured defaulted LCs without improving its risk framework, resulting in significant unsecured exposure.
Sector-Wide Misconduct: A Pattern?
This case echoes broader concerns. In 2021, the State Bank of Pakistan (SBP) and Securities and Exchange Commission disclosed “misappropriations” at Hascol, noting Rs 39 billion classified as defaults—compelling regulators to initiate criminal proceedings Tribune had reported.
The PAC has been notably active: recent sessions by the committee have flagged scandalous financial lapses across ministries, including irregular spending in the Planning Division, Dawn) revealed.
PAC Chairman Junaid Akbar has increasingly criticized systemic lapses, stating in May that certain ministries “might as well be shut down” over repeated audit failures Tribune reported.
Timeline: Why Now?
The NBP’s loan to Hascol, approved under weakened supervision, occurred at the peak of sector downturn. Yet, credit facilities were magnified rather than tightened—a paradox in contravention of financial prudence. Investigators note that while such facilities should have been curtailed, they expanded instead—raising questions about ulterior motives and oversight gaps.
Legal Status and Recoveries
As of August 31, 2022, NBP provisioned 100% against its Rs 23 billion exposure. Legal action is underway, with an FIA challan against 11 bank officers and a lawsuit filed by NBP against Hascol. The bank has managed to recover Rs 197 million from a Diminishing Musharaka facility by October 31, 2023. The remainder remains classified as a loss, pending further recovery and legal resolution.
Expert Reaction and Public Outcry
Financial analysts say the case highlights longstanding weaknesses in Pakistan’s risk management, especially in historically high-value government-backed loans. Critics suggest that the timing of the PAC hearing may be linked to external pressure from the IMF, which has repeatedly urged Pakistan to strengthen its banking governance.
Ali Khizar Aslam, Director Research at Business Recorder, noted on LinkedIn:
“Hascol is a case of corporate fraud & default… It was cooking books all the time and management was making fool out of lenders, investors and regulators.” LinkedIn Post revealed.
A viral tweet echoed public sentiment:
Hascol scammed over 54 billion Rupees, collaborated with National Bank of Pakistan. Just a regular day at office.” — @Vaal1ddd
What’s Next?
PAC has instructed the FIA to swiftly complete its investigation. The committee will reconvene for a decision once the challan is filed in court. In parallel, NBP’s legal team is proceeding with recovery efforts.
In the broader context of Pakistan’s banking and corporate governance reform, this episode strengthens calls for greater regulatory oversight, transparent lending practices, and accountability for financial institutions deviating from policy frameworks.Banks’ Profit Hits Rs158bn in 3Q2024
