News
Thursday, September 30, 2010
SC holds SBP responsible for waiving off loans
* Court directs SBP to submit details of 10 cases from each year that met conditions set in law for writing off loans
* Says Circular 29, on basis of which loans were waived off, is contrary to Section 33-B of Banking Companies Ordinance 1962
ISLAMABAD: The Supreme Court on Wednesday observed that the State Bank of Pakistan (SBP) was mainly responsible to waive-off billions of rupees in bank loans on the wishes of influential figures of the country, causing losses of billions of rupees to the national exchequer.
A three-member Supreme Court bench comprising Chief Justice of Pakistan Iftikhar Muhammad Chaudhry, Justice Tariq Parvez and Justice Ghulam Rabbani was hearing a suo motu case pertaining to writing off of over Rs 54 billion loans.
“Prima facie, the responsibility lies on the shoulders of the State Bank as according to Circular 13, no loan can be waived off without the approval of the State Bank of Pakistan,” the CJP noted.
The court directed the bank to submit by October 20 details of at least 10 cases from each year, which met two conditions set in Section 33-B of the Banking Companies Ordinance and which were pre-requisites for writing off loans.
“We are only concerned that the wealth of this country should come to the nation,” the CJP observed, asking the SBP counsel to submit details of at least 10 cases wherein violations regarding writing off loans had been made.
The court observed that it would look into the State Bank’s Circular 29 regarding writing off loans in view of Article 25 of the constitution. Syed Iqbal Haider, the SBP counsel, Abdul Hafeez Pirzada, amicus curiae and Salman Akram Raja, counsel for private banks, appeared before the court.
Contrary: The bench further observed that Circular 29 on basis of which huge amount of loans had been written off was contrary to Section 33-B of the Banking Ordinance.
Haider argued that the SBP did write off loans or gave directions to banks to waive off loans, but it also issued guidelines to do so. The court also observed in its order that the SBP and other commercial banks were least bothered about recovering the loans by using the relevant law under the Banking Companies Ordinance 1962. It noted in its order that the banks were facilitating influential people, though law was available, but no one was serious in applying it. staff report/app
Courtesy www.dailytimes.com.pk