KARACHI, May 9: The Sindh High Court asked commercial banks on Friday to formulate a loan recovery policy under the guidance of the State Bank of Pakistan and in accordance with the law and Constitution, particularly the constitutional provisions guaranteeing dignity and security of citizens.
The criminal activities adopted by those appointed by the banks to recover debts must come to an end, a division bench comprising Justices Mrs Qaiser Iqbal and Mahmood Alam Rizvi warned, noting that in certain cases debtors had been forced to commit suicide. The bench was hearing a petition moved by Anwar Mahmood, an artificial jewellery dealer who alleged that he had and members of his family had been subjected to threats and humiliation because of default.
The petitioner submitted through Advocates Tahmasp Razvi and Haider Imam Rizvi that he had been making regular repayments since the year 2000 until 2007 when he went into default due to financial losses inflicted on him by a market fraud. He suffered a loss of about Rs9 million and had to sell his shop on M.A. Jinnah Road. Despite his requests for adjustments and rescheduling, the creditor banks made threatening phone calls and sent ‘goons’ to his residence in Federal ‘B’ Area, who used abusive language not only against him but also against his wife, ailing widowed mother and five daughters. He complained to police but they refused to provide him protection. The bench summoned the presidents and recovery chiefs of the respondent banks, Standard Chartered Bank, ABN Amro, NIB, HBL and Askari and the police officials concerned.
Extending its interim injunction against harassment of the petitioner, the bench directed the station house officer of Samanabad to complete his investigation into the petitioner’s complaint against the bank recovery teams and submit a report by May 30, the next date of hearing. Modifying its order of April 30, the bench ordered the SBP to furnish a list of loan defaulters of up to Rs5 million whose debts were written off by commercial banks.
The presidents of the banks, who answered the summons on Friday, were exempted appearance on the next date. Their counsel were asked to file para-wise comments and counter-affidavits before April 30 and the petitioners’ counsel were told to furnish a copy of the petition to Deputy Attorney-General Rizwan Ahmed Siddiqui, who represented the federal government.
The bench noted that the controversy pertained to a ‘delicate’ issue involving recovery of unliquidated loans from borrowers. This court, it observed, has consistently taken the view that the mode and procedure provided under the law should be adopted for recovery of loans. It seems that the provisions of the law been spelt out by the Recovery Ordinance of 2001 have been flouted. The presidents of the banks should devise a uniform policy within the bounds of law.
The counsel appearing for the banks, the bench noted, have candidly agreed on the need for such a policy so that the life and liberty of the borrowers were not threatened. The role of police could also not be overlooked. Unfortunately, no substantive investigations had been conducted into the petitioner’s complaint so that the mischief created by recovery teams was put to an end.
Meanwhile, another petition against the high-handedness of recovery teams was moved by Mrs Tehmina Mehdi through Advocate Syed Nasir Abbas Rizvi. She alleged that her husband had been picked up by recovery ‘contractors’. The counsel contended that banks contract out recovery rights to ‘professional contractors’ so that they could claim that their employees were not involved in unlawful recovery measures.
Advocates Mansoorul Arifin, Liaquat Merchant, Abdul Rauf Arain, Mehmood Mandviwala, Naveedul Haq, Sajid Zahid were among the lawyers who represented the respondent banks. NIB Bank President Khwaja Iqbal Hasan, ABN Amro President Shahzad Naqvi, SCB chief executive Badar Kazim, HBL litigation chief Rafiuddin Junejo and SBP assistant director Muhammad Ramzan were among the bankers present.