Due to the non-functioning of the Programme Management Unit (PMU), the government has not conducted an audit of wholesale lenders with regard to subsidy claims under the Kamyab Pakistan Programme (KPP). Therefore, the Finance Division was unable to hire independent external auditors.
The Cabinet approved the launch of the Kamyab Pakistan Program in 2021. Kamyab Karobar, Kamyab Kissan, Naya Pakistan Low-Cost Housing, Kamyab Hunarmand, and Sehatmand Pakistan are among its features. According to the 2004 Public Procurement Rules, wholesale lenders were chosen through open bidding.
The government agreed to provide a mark-up subsidy equivalent to the difference between the “customer rate” and the “bank rate” in exchange for these lenders’ choice of microfinance institutions (MFIs) to disburse loans to the targeted applicants.
The State Bank of Pakistan (SBP) was given the responsibility of conducting a “sanity check” of payments while the PMU was tasked with validating the subsidy claims of wholesale lenders. The PMU, however, was not operational, and outside auditors were not retained.
A summary written for the Economic Coordination Committee (ECC) on September 21, 2021 stated that the Finance Division would come up with a mechanism for wholesale lenders to make “loan loss payments” and claim subsidies after consulting with the SBP. Fully validating the claims was the PMU’s responsibility, an independent external auditor, hired by the Finance Division following a competitive bidding process, would audit them every year. Lenders would be responsible for paying for such services.
The wholesale lenders were required to forward the consolidated claims for mark-up subsidy and credit loss to the PMU for validation. As a result, the PMU would recommend that the SBP pay the claims. However, because the PMU was not functioning, the SBP had been validating claims prior to requesting that the Finance Division approve funding for initiatives like the Pakistan Remittance Initiative (PRI) and the Sohni Dharti Remittance Program.
The SBP should be entrusted with the duty of validating the claims of wholesale lenders following due diligence, according to the proposal made by the Finance Division. The proposal to entrust the SBP to independently verify the claims of wholesale lenders after conducting due diligence was approved by the ECC after reviewing a summary provided by the Finance Division. As was the case with the PMU, it was directed that the requirement to conduct an additional external audit of such claims would not be applicable under the new process.
