ISLAMABAD: The chief justice of the Supreme Court on Monday threatened to summon the governor of the State Bank of Pakistan to appear in person before the court for the alleged failure of the central bank to adequately respond to the court’s inquiry into a loan write-offs case.
“It appears Governor State Bank is not taking interest in this case,” said Chief Justice Iftikhar Muhammad Chaudhry. “We will summon him to explain what action or legislation has yet been done for the recovery of these loans.”
The court has taken suo motu notice of Rs54 billion in loan write-offs allegedly carried out under political pressure. According to the State Bank, over 54,000 people received loan write-offs in the fiscal year ending June 30, 2009 totalling some Rs74 billion.
The lawyer for the central bank, Syed Iqbal Haider, presented a list of debtors whose loans had been written off, but argued that most of the write-offs had followed legal procedures and presented the relevant State Bank directives under which the debts had been dealt with.
The court reacted to this assertion with ire and scepticism. Justice Khalilur Rahman Ramday asked Haider to cite an example of a loan written off unlawfully. Haider named two companies – Indus Sugar Mills and Redco – that had used political pressure to receive loan write-offs.
Nevertheless, the court insisted that the central bank devise a strategy to recover the written off loans. It even went as far as suggesting that the State Bank’s regulations for loan write-offs may come under judicial review.
“This money is not someone’s personal, this money has to be invested for the welfare of poor children of the country,” said the chief justice.
Loans write-offs, however, normally come out of the bank’s own income and equity, which it earns through charging interest on loans. Depositors’ money normally remains safe, even when banks are running losses. No bank has ever filed for bankruptcy in Pakistani history, though some have come close.
In another case, the Supreme Court has given the Port Qasim Authority four weeks to accomplish a task that the PQA had not been able to complete in 38 years: formally framing its rules for hiring and employment.
The directive was handed down on Monday during the hearing of a petition of Abdul Jabbar Memon, a suspended official of the Port Qasim Authority, who challenged the employment of Mehmood Zameer Farooqi – brother-in-law of Makhdoom Amin Fahim, the federal commerce minister – at the Port Qasim Authority.
The bench also asked the authority to review the reinstatement request of Memon and report back to the court in 15 days.
The Port Qasim Authority was set up in 1973 but the PQA only established a committee to draft employment rules in 2003, thirty years after the authority was first set up.
The committee, in turn, did not meet until 2010, seven years after it was formed and 38 years after the PQA came into existence.
Published in The Express Tribune, February 15th, 2011.