ISLAMABAD, July 21 (APP): The Senate Thursday passed the Financial Institutions (Recovery of Finances) (Amendment) Bill, 2016 paving way to facilitate recovery process of bank loans.
Minister for Law and Justices Zahid Hamid on behalf of Minister for Finance and Revenue Mohammad Ishaq Dar moved the bill to amend the Financial Institutions (Recovery of Finances) Ordinance, 2001 in the House.
The Statement of Objects and Reasons of the bill says the Financial Institution (Recovery of Finance) Ordinance (FIRO) was promulgated in 2001, primarily to deal with the recovery process of the bank loans and loan defaults.
However, the Supreme Court declared section 15 of the ordinance as ultravires to the Constitution on December 10, 2013.
The State Bank of Pakistan (SBP) initiated the process of consultation among the relevant stakeholders to frame the amendments in the FIRO. In light of the judgment of the Apex Court and requirement of the Financial Institution the Financial Institutions (Recovery of Finances) (Amendment) Bill, 2016 has been drafted.
The proposed amendments are meant to facilitate recovery process of bank loans so that loan defaults and incidence of written off loans could be minimized. The pecuniary limit of High Court cases is proposed to be enhanced to Rs 100 million to reduce the burden of cases on superior courts.
The loan availed from Pakistani banks in other countries would also fall under Recovery Ordinance. The willful default would be an offence under the ordinance.
The loans written off for reasons other than merit, would be open to trial at any stage without application of any limitation, knowingly submission of false information in the court would render the parties ineligible to defend the case and frivolous filing would be discourage with fines.
The smooth recovery process would result in growth of healthy credit culture in the country, reduce risks of default and writing off of loans and would also create additional funds for lending to new segments of borrowers. The measures taken together would stabilize the financial system and contribute to sustainable economic growth in the country.