LAHORE, Sept 23: Certain banks and financial institutions are stubbornly refusing to implement the decisions of the central bank’s dispute resolution committee under the SBP scheme to write off irrecoverable loans/advances, borrowers say.

Taking a cue from the Sindh High Court (SHC) verdict, in which IDBP has been ordered to finalize agreement for settlement of the loan of Century Fabrics (Pvt) Ltd as per terms of the decision of the committee, some borrowers, whose cases are not being settled, are contemplating moving the court for an early implementation by the banks of the committee’s decisions in their cases.

It is pertinent to mention here that IDBP had itself moved the court to seek reversal of the SBP committee decision in favour of the borrower.

A borrower, enforcement of whose case is being delayed for the last three or more months, said: “Litigation, whether by banks or by borrowers, would mar the very objective of the scheme.”

Speaking to Dawn here on Tuesday, he said the central bank had given the guidelines for writing off irrecoverable loans/advances to banks and DFIs in order to help them clear their books as well as to “radically bring down the number of court cases between the borrowers and the lenders”.

“What is the use of launching the scheme and establishing the dispute resolution committee if its findings are to be thrown out of window by the banks and DFIs?,” he asked. He also pointed out that “the Sindh and Lahore high courts and the Supreme Court have ruled in different cases that the committee decisions are binding on the banks and DFIs”.

Moreover, he said, the SBP governor had himself stated that he had “delegated his authority” to the dispute resolution committee for effective implementation of the guidelines. “Despite all this the bankers are stubbornly trying to avoid implementing decisions of the committee and going to courts for their reversal.”

IDBP, ABL and PICIC are said to be the “delinquent” banks that are resisting the decisions of the dispute resolution committee.

Sources say: “PICIC was continuing with the auction of projects whose cases had already been brought to the SBP committee for its decision after hearing both borrowers and lenders in spite of the court ruling stopping the banks from selling a project whose case was with the committee.” They also pointed out the recent auction of Sindh Textile Mills by PICIC in this regard. It is also stated that it is not responding to the queries made by the committee in different cases, hampering finalization of decisions on them. “We have got response from PICIC in just 8-10 cases out of 70 sent to it by the committee,” they said.

On the other hand, IDBP is said by the sources to be “refusing to accept the forced sale value of projects determined by the SBP committee after hearing the points of view of both the parties”. Same is the case with ABL which is not implementing the decisions taken in several cases by the committee months ago.

The reason behind the non-acceptance by these banks of the FSV determined by the committee is said to be the “lack of sufficient provisioning made by them against non-performing loans”.