Harassment of defaulters – SHC reserves verdict on identical petitions

KARACHI – The Sindh High Court (SHC) on Saturday reserved its verdict on identical constitutional petitions filed against the staff of different private banks and institutions for engaging in harassment for loan recovery.
The petitions were filed by Anwer Mehmood and others, who approached a three-member SHC bench headed by Chief Justice Sarmad Jalal Osmany. They impleaded the State Bank of Pakistan (SBP) governor; presidents and heads of recovery departments of ABN Amro Bank, NIB Bank, Askari Commercial Bank, Habib Bank Limited and Standard Chartered Bank; the interior secretary; Sindh police chief; town police officers of Saddar and Gulberg towns; station house officers of Samanabad and Kharadar police stations; and bank recovery staffer Farhan Ali as respondents.
The petitioners submitted that they had availed credit cards and loan facilities from some respondent banks, but could not repay the outstanding amounts due to different reasons, including fraud in business. However, the banks started sending recovery teams to their houses and workplaces that harassed and misbehaved with them and their family members.
In the previous hearing, Mehmood’s counsel, Advocate Rasheed A Razvi, had stated that SBP’s policy regarding loan recovery being adopted by banks for their credit business was contrary to the fundamental rights guaranteed in the Constitution of Pakistan, as it created classes among customers by using different criteria for loan recovery.
He said that the SBP circular created separate class of customers and this unjust classification was a violation of Article 25(1) of the Constitution. He submitted that permission to banks for hiring private agencies for loan recovery amounted to giving them a licence to kill innocent persons, adding that banks could not be allowed to discriminate among its customers by adopting different methods for loan recovery.
Though bank officials had a right to recover loans from defaulters, this right could not be transferred to a private agency until necessary amendments were made to banking laws with regard to recovery of short-range loans.
He contended that hiring private agencies for loan recovery would also defeat the purpose of banking courts and the Financial Institutions (Recovery of Finances) Ordinance, and the same could be misused; therefore, the fundamental rights of the citizens would be at the mercy of private agencies. He prayed to declare the SBP guidelines contrary to Articles 10(a), 14 and 25 of the 1973 Constitution.