The Supreme Court has approved the State Bank’s request for constituting a commission for loan recovery and has sought the opinion of banks and their customers and loan defaulters within four days.
The State Bank’s governor has agreed to form a three-member commission headed by Justice (retd) Saleem Akhtar.
Dr Pervez Hassan, counsel for Allied Bank, presented his submission on the proposal of the commission, which said: “The commission should be empowered to impose heavy financial penalties on loan defaulters and to send them behind bars because that is what they are afraid of.”
According to him, only a powerful commission can ensure that the loans are recovered. Citing Circular 29, he said that it was the best available document on banking laws but it has been misused. Banking rules need to be amended through legislation to stop misuse of loans and to increase the number of banking courts.
The commission will present an interim report in three months and the final report after six months.
Chief Justice Iftikhar Muhammad Chaudhary, while presiding over a two-member bench, said the court will facilitate the commission in the recovery of loans. “People obtain loans to set up businesses and have their loans written off to install more firms. Loans waived off in Pakistan are far greater than anywhere else. “People don’t pay taxes, why would they return their loans?”
The court directed that the commission’s jurisdiction and the conditions under which it is to operate should be advertised in all major newspapers to invite people’s views on the issue.
Published in The Express Tribune, March 15th, 2011.