SC seeks report on loans waived in last 2 years

ISLAMABAD – The Supreme Court (SC) on Monday directed the State Bank of Pakistan to provide details of bank loans waived off during the last two years and observed that it could go to any extent for the recovery of the
public’s money.
A four-member bench of Chief Justice Iftikhar Muhammad Chaudhry, Justice Muhammad Sair Ali, Justice Ghulam Rabbani and Justice Khalilur Rehman Ramday, was hearing a suo motu case initiated on news reports saying loans worth Rs 54 billion had been written off.
“We have to maintain the rule of law in the country. We have nothing to do with who is how much influential,” the chief justice remarked, adding that the loans waived off belonged to the public, therefore it would have to be returned to the national exchequer.
Justice Ali said most of the loans were waived off on “a political basis instead of merit”. “We had asked the State Bank to provide details of the written-off loans. However, the bank hasn’t provided the details yet,” Justice Ali noted.
Syed Iqbal Haider, counsel for the State Bank of Pakistan (SBP), told the court that the SBP was the regulatory authority, and not the controlling authority, adding that most of the banks belonged to the private sector, hence giving and waiving off loans was decided by their board of directors.
Justice Ali asked him how and to whom had the loans been granted. The counsel admitted that over 50, 000 people had gotten their loans waived off between 1971 and 2009 in violation of the rules and regulations. He said it was quite a big task to find out the details of all the loans waived off between 1971 and 2009. He requested the court to form a commission in this regard, which the court rejected.
“When you admit that loans were waived off illegally, why don’t you take action against those responsible?” the chief justice asked. “There is democracy in the country, therefore, the government can promulgate law for the recovery of the waived-off loans”, the chief justice observed. The court asked the SBP governor to separately submit the details of the loans secured by the Indus Sugar Mills and Redco Textile Mills and later got them waived off.
The chief justice said the courts dealing with the loans’ cases would also be monitored for the recovery of huge loans. “The court can hear the case of waived off loans even for more than three months by halting proceedings of other cases, for recovery of about rupees two and half trillion loans”, the chief justice observed.
Justice Ali asked the counsel what action had the SBP taken against the responsible banks for waiving the loans off, asking whether the SBP had cancelled any bank’s licence in this regard or not? Justice Ramday observed that according to Section 40-A of the Banking Companies Ordinance 1962, it is the responsibility of the SBP to protect the interest of the depositors.
He further observed that Section 41 of the ordnance empowered the SBP to take action against those banks which go against public interest and could issue directives in this regard.