News
Friday, March 11, 2011
SC hints at strict action against bank loan defaulters* SC observes SBP circular on writing off of irrecoverable loans, advances is being misused
* CJP says everybody is going scot-free in the country
Staff Report
ISLAMABAD: Chief Justice of Pakistan (CJP), Iftikhar Muhammad Chaudhry, on Thursday hinted at ordering initiation of judicial proceedings against the defaulters of bank loans if the State Bank of Pakistan (SBP) failed to recover the written off amount.
Heading a two-member bench that resumed hearing of a suo motu case relating to the loans waived off between 1971 and 2009 and totalling around Rs 256 billion, he warned that directives would be issued for filing of criminal cases against these defaulters. “SBP is not playing its role in recovering loans from the defaulters,” he said, adding, “Loans of billions of rupees had been written off by private and national banks by misusing Circular 29 which should be stopped.”
He observed that SBP Governor, Shahid Kardar, was a prudent man and he would utilise his authority before any judicial order was issued.
The CJP observed that despite the fact that Circular 29 had expired on April 14, 2003, the banks were still writing off loans.
Iqbal Haider, counsel for the SBP, presented reports on Redco Textile Mills and Indus Sugar Mills, two defaulters, and said that the SBP governor had contacted Justice (r) Saleem Akhtar to examine the cases relating to writing off of loans. The CJP observed that SBP’s Circular BPD-29, which provided new guidelines on writing off of irrecoverable loans and advances, was still being misused.
The court directed the SBP to examine why it could not exercise its own jurisdiction to take action against those borrowers who had illegally settled their debt amounts without complying with the provisions of Circular 29. The SBP was ordered to submit a report in this regard on the next date of hearing.
The CJP said that the bank officers, managers or other high officers, who had waived off loans, were also responsible in case the company or mills defaulted. “Everyone is going scot-free after committing crimes in this country,” the CJP remarked.
The CJP said the SC would direct the courts and banking tribunals to dispose of these cases in three-month time and the apex court would itself monitor it.
Haider informed the court that relief worth Rs 1.11 billions was given to the mills. He informed that in many cases banks did not register criminal cases against the borrowers for willful default.
Courtesy www.dailytimes.com.pk