Financing under e-pass book system: Govt seeks amendments to loans law

ISLAMABAD: The government has proposed amendments to the Loans for Agriculture, Commercial and Industrial Purposes Act 1973 to safeguard the financing of the banks/development finance institutions (DFI) provided under digitalised/e-pass book system.

The Finance Division, in a brief to the Senate Finance Standing Committee, stated that the ZTBL has proposed amendments in the Loans for Agriculture, Commercial and Industrial Purposes Act, 1973, after introduction of mark-up free agriculture e-credit scheme by the Punjab government, the ZTBL is financing under digitalised/e-pass book system.

As digitalised pass book is not recognised by the 1973 Act and rules made thereunder or any other law; therefore, loans provided on the basis of digitalised/e-pass book are likely to jeopardise the interest/funds of the bank.

Therefore, the ZTBL, proposed amendments in the Agriculture, Commercial and Industrial Purposes Act 1973 to safeguard financing of the banks DFIs under digitalised/e-pass book system to safeguard the financing of the banks/DFI.

Presently, the Finance Division stated that 99 percent ZTBL loans are provided on Agricultural Pass Book system, which was introduced by the federal government through promulgation of Loans for Agricultural, Commercial and Industrial Purposes (LACIP) Act, 1973, for simplifying agriculture loans procedure. After the introduction of e-pass book system by the Punjab government and as it was not recognised by the said Act; therefore, amendments were proposed.

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The State Bank of Pakistan (SBP) has also been consulted in the matter and the SBP was of the view that proposed amendments would be beneficial and would not prevent the acceptance of old-pass book for issuance of agriculture loans where e-pass book is not available.

The draft bill has also been vetted by the Law and Justice Division and has also been approved by the Senate Standing Committee of the Finance and Revenue, and forwarded to the Committee on Legislative Business. Earlier, the law was passed by the National Assembly in 2018; however, it could not be passed by the Senate and consequently, the proposed law lapsed.

Copyright Business Recorder, 2021