Supreme Court will Legality Loan Write-Off
Circular 29 of the State Bank of Pakistan (SBP), under which Rs256 billion in loans were written off from 1971 to 2009 is legal will be decided by The Supreme Court. Iftikhar Muhammad Chaudhry, the Chief Justice castigated the central bank for writing off the loans of defaulters whose factories are still running. He presiding over a three-member bench hearing a suo motu case against the SBP.
He contrasted this situation with the plight of the poor people whose assets are confiscated if they cannot pay off their loans. Circular 29 was a constitutional law that did not discriminate against borrowers, said Syed Iqbal Haider, the counsel for the SBP. Circular 29 was expiry in 2003 led to greater fraud and that its a sound law, claimed Pervez Hassan, the Counsel for Allied Bank Limited. banks should not include loans they are unlikely to recover on their balance sheets, Hassan admitted.
The SBP had ordered to institute a commission to probe loan write-offs by the Supreme Court on March 14. This commission should start its work as soon as possible, Hassan said at yesterday’s hearing. Before the commission could become functional, the court would have to determine the legality of Circular 29, said Justice Chaudhry.
