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ISLAMABAD, June 1: The Supreme Court asked the lawyers assisting it in a loan write-off case on Wednesday to come up with a policy that was acceptable to the State Bank governor and spelled out the scope of a three-member commission formed to look into the matter.
The court issued the directives after Syed Iqbal Haider, the counsel for State Bank of Pakistan, said the SBP governor had agreed to issue a circular formalising the scope of the commission from 1971 onwards and suggesting ways and means to scrutinise cases of borrowers who had taken loans but later managed to get them written off.
The counsel added that the governor would appreciate it if the court suggested some guidelines in this regard.
“We want to see the SBP enhance its advisory jurisdiction,” observed Chief Justice Iftikhar Chaudhry, who heads a three-judge bench also comprising Justice Muhammad Sair Ali and Justice Ghulam Rabbani.
The court has taken up suo motu notice on media reports that the central bank had quietly allowed commercial banks to write off non-performing loans of Rs54 billion under a scheme introduced by former president Pervez Musharraf. The amount swelled to Rs256 billion after the scope of scrutiny of written off loans was extended to December 2009.
Headed by former Supreme Court judge Syed Jamshed Ali, the commission formed under the Banking Companies Ordinance 1962, will have powers to summon and enforce attendance of a person, examine him on oath, order for production of any document, receive evidence on affidavits and examine witnesses or documents.
Former director general of SBP Rashid A. Chughtai and Associate Chartered Accountant Yousaf Adil may also be part of the commission. Its terms of reference include penalising bankers who waived loans without any justification with the aim of halting the tendency for ever.
The commission will also hold bankers responsible for loans to borrowers on inadequate securities and recommend steps to be taken against them. It will suggest measures to safeguard the amount of loans against arbitrary concessions extended for political or other considerations.
