KARACHI, July 4: The State Bank of Pakistan has set up a resolution committee headed by the director of its Banking Policy Department to examine borrowers complaints.

The committee will have four other members: (i) a representative from Banking Inspection Department of the SBP who will be a chartered accountant (ii) a representative of the bank concerned (iii) a chartered accountant from the chartered accountancy firm listed on the SBP panel to represent the borrower and (iv) joint director of SBP complaints cell.

The central bank said in a circular issued on Friday that the committee is being set up in response to the complaints from borrowers of different banks. These borrowers have pointed out that banks are compounding markup in violation of guidelines issued by the SBP for elimination of riba from the banking system.

“The committee will examine the complaints falling in its purview and shall decide the issue in terms of guidelines issued by the SBP from time to time. The decision of the committee will be binding on the bank and complainant/borrower.”

A public statement issued by the SBP said the committee headed by BPD director Kamran Shehzad would directly entertain and examine all requests for resolving disputes on the outstanding amount and liabilities owed by the borrower and claimed by the bank. The request can originate either from the bank or from the borrower and the decision of the committee will be binding on both parties.

The statement says a large number of non-performing loans can be settled between the banks and the borrowers if the outstanding amount of liabilities is determined in a fair, objective and transparent manner. Such settlement will avoid unnecessary expenses and protracted litigation, enable many of the industrial units to revive or operate at full capacity or expand their operations, remove many genuine businessmen from adverse credit reporting list and allow banks to transform many of their NPLs to performing category.

The SBP has requested the Federation of Pakistan Chambers of Commerce and Industry and all other trade bodies in the country to bring this mechanism to the notice of the businesses.