Bad loans: SHC reserves judgment in case

Sindh High Court hears case against hiring of agents by banks to reclaim loans.

KARACHI: The Sindh government should not support defaulters, said Advocate Iqbal Haider, the counsel for State Bank of Pakistan (SBP), before the Sindh High Court on Saturday. A bench comprising Chief Justice Sarmad Jalal Osmany, Justice Faisal Arab and Justice Zahid Hamid was hearing a case against hiring of agents by commercial banks to reclaim loans.

The respondents cited in the petition included Royal Bank of Scotland, Citibank and UBL as well as police officials. The case took an interesting turn when Additional Advocate General (AAG) Sarwar Khan, representing the police officials, ended up on the petitioners’ side and agreed that private agents hired by banks can sometimes resort to harassment.

RBS representative Sajid Zahid said that every action taken by the bank was in line with their regulations and in agreement with the borrower.

Borrowers have to agree to a certain mode of repayment and are well aware of the consequences of defaulting, Zahid said. “The sanctity of the agreement has to be preserved otherwise the entire banking system will collapse,” he warned.

Haider objected to the AAG’s arguments and said he had no right to make these comments.

The bench noted his objections and after rebuttal from the leading counsel Rasheed Razvi, reserved judgment.

Published in The Express Tribune, December 19^th, 2010.