KARACHI, Jan 12: The Federal Shariat Court admitted on Monday a petition questioning the low returns on bank deposits and remission of loans during 2001-2008 for regular hearing on a date to be fixed by its office.

The petitioner, Dr Shahid Hasan Siddiqui, was asked by a bench consisting of FSC Chief Justice Haziqul Khairi and Justices Fida Mohammad Khan and Salahuddin Mirza to amend the petition in order to cite commercial banks as respondents. Challenging a State Bank of Pakistan circular (No 29) of October 15, 2002, which prescribes guidelines for write-offs, as un-Islamic, the economist had only impleaded the SBP. The petition would be heard at the principal seat of the court in Islamabad.

Dr Siddiqui said the depositors were subjected to gross exploitation by the banks despite a phenomenal rise in their profits from January 2001 to June 2008. The return on the profit-and-loss accounts was reduced from 8 per cent to about 3.4 per cent, even though the banks were bound to share their profits with their depositors. The depositors were deprived of about Rs7 billion in profits during the period. He requested the court to declare the practice as un-Islamic and direct the banks to at least enhance the returns to the rate of inflation.

Questioning the SBP’s write-off circular, he said it sanctified the assets of defaulters not under lien to banks and placed them beyond the reach of creditors. Thus, national savings certificates, bank deposits, shares, stocks-in-trade and other immovable property could not be touched by the creditor banks while considering remission of bad debts.

Loans were written off not only in disregard of the interests of the ordinary depositors but also of the banking sector at large. It promoted a ‘culture of default’, fuelled inflation, discouraged savings, condoned non-utilization of loans and widened the rich-poor gap. The circular was repugnant to the Quran and Sunnah and should be struck down by the FSC, the petitioner prayed.