KARACHI, Nov 4: The State Bank has reconstituted the committee it had set up in July to help the banks and the borrowers resolve their disputes.

The central bank said in a circular (BPD No 37) issued here on Tuesday that the committee would now comprise the following: Director of the Banking Policy Department of SBP who will head the committee; a representative from the Banking Inspection Department of SBP who will be a chartered accountant and a permanent member of the committee; a representative of the bank concerned who will be a revolving member; a chartered accountant registered with the ICAP to be appointed by the borrower; legal counsel of the Banking Policy Department of SBP who will be a permanent member; and joint director of the Complaints Cell of SBP who will be a member/secretary to the committee.

The SBP circular says that the committee known as resolution committee will examine the complaints and decide the issues in terms of guidelines issued by the SBP from time to time. It may also conciliate in these complaints in determining the outstanding amount in case the issue is not settled otherwise keeping in view the cash flow and value of the collateral, etc.

The circular says that the committee will also consider cases of charging mark-up on mark-up by the banks in violation of the SBP guidelines for elimination of “Riba” from the banking system.

When the SBP had first set up this committee in July the key purpose was to help the borrowers resolve such disputes with the bankers that involve charging of mark-up on mark-up which is treated as Riba that is not allowed under the Islamic law.

Initially the committee comprised four members only. The SBP circular says that it has been reconstituted on the representations from various quarters, including the Institute of Chartered Accountants of Pakistan. In these representations it was requested that the borrowers be allowed to nominate any chartered accountant on the committee instead of one from the chartered accountancy firms listed on the SBP panel. This demand has been accepted.