ISLAMABAD – The Supreme Court on Thursday directed the State Bank of Pakistan (SBP) to examine why it could not exercise its own jurisdiction to take action against the borrowers who illegally settled their debt without complying with the provisions of Circular BPD-29 and demanded a report by the next date of hearing. A two-member bench of Chief Justice Iftikhar Muhammad Chaudhry and Justice Ghulam Rabbani was hearing a suo motu case about the waiver of loans worth Rs 256 billion by banks between 1971 and 2009.
The court observed that State Bank of Pakistan’s Circular BPD-29 was being misused. SBP’s lawyer, Iqbal Haider presented reports on Redco Textile Mills and Indus Sugar Mills, telling the court that the SBP governor had contacted Justice (r) Saleem Akhtar to examine the cases of written-off loans. To a question, he said Rs 1.11 billion relief was given to the mills, adding that in many cases, the banks did not even get criminal cases registered against borrowers for wilful default. He said the banks had on one hand declared Redco Textile Mills a wilful defaulter and wrote off its loan on the other.
The company continued its commercial function until the banks filed a reference against the mills with NAB, which arrested its directors Saifur Rehman and Mujeebur Rehman. However, lawyer for Redco Textile Mills Salman Butt informed the court that his client did not owe any money to any bank. The chief justice said, “We are sure that identical situation prevails in many other cases of the written-off loans.” He asked why had cases not been registered against the defaulters and said the money belonged to the public and should be recovered. Later, the court adjourned proceedings until March 14.
