NA panel recommends FIs Amendment Act: Foreclosure and recovery framework being streamlined

ISLAMABAD: The Standing Committee on Finance and Revenue on Thursday recommended the Financial Institutions (Recovery of Finance) Amendment Act, 2026, aimed at strengthening and streamlining the foreclosure and recovery framework through clearer procedures, enhanced enforcement mechanisms and measures to reduce delays in recovery proceedings.

The proposed legislation is scheduled to be presented before the National Assembly on Friday (May 15) for approval.

The committee meeting held on Thursday under the chairmanship of Syed Naveed Qamar, which continued its consideration of “the Financial Institutions (Recovery of Finance) Amendment Act, 2026”. The committee deliberated in detail upon a series of proposed amendments aimed at safeguarding mortgagors against arbitrary, coercive, or unfair exercise of powers, particularly in relation to foreclosure and recovery proceedings under Sections 15A(2), (6), (7), (10), (12), (14), 15(b), 15(d), and 15(17).

After detailed deliberations, the panel recommended that the Bill, as reported by the Standing Committee, may be passed by the National Assembly.

During clause-by-clause consideration of the newly inserted Section 15A, the Committee examined the proposed mechanism relating to the issuance of first, second, and final notices, each carrying a minimum notice period of thirty days prior to initiation of further recovery proceedings.

The parliamentary body also deliberated upon provisions concerning restructuring, rescheduling, and settlement of mortgage liabilities, and expressed concern that borrowers should not remain subject to indefinite delays by financial institutions in deciding such requests.

The Chairman emphasized the importance of maintaining a fair and equitable balance between the rights of financial institutions and those of borrowers.

The Committee extensively debated the proposed foreclosure mechanism under housing finance arrangements and expressed serious concern that, in the absence of adequate legal safeguards, the proposed framework could operate harshly against borrowers and ordinary citizens.

The Committee also approved the minutes of its previous meeting held on 13th May, 2026.

The meeting was attended by Bilal Farooq Tarar, Dr. Nafisa Shah, Dr. Sharmila Faruqui, Dr. Mirza Ikhtiar Baig, and Muhammad Jawed Hanif Khan, MNAs. The meeting was also attended by the State Minister for Finance and Revenue, the Secretary, Ministry of Law and Justice, and senior officers from the Finance Division, Law Division, and the State Bank of Pakistan.

Copyright Business Recorder, 2026