IHC told: ‘Khushhali Microfinance Bank’s employees also entitled to EOBI benefits’

ISLAMABAD: The Islamabad High Court (IHC) was informed that employees of Khushhali Microfinance Bank are also entitled to the protection and benefits provided under the Employees’ Old-Age Benefits Institution (EOBI) scheme.

A single-judge bench of Justice Arbab Tahir heard a petition, filed by Khushhali Microfinance Bank, seeking exclusion of its employees from the ambit of the EOBI and the applicable old-age benefits laws.

In 2019, the EOBI issued a notice to the petitioner bank, seeking recovery of approximately Rs 1 billion on account of unpaid contribution towards old-age benefits for its employees. The bank, however, assailed the demand notice in the Islamabad High Court, relying on Section 47(e) of the EOBI Act, 1976, which expressly excludes employees of banks and banking companies from the application of the Act.

Relying on this provision, the bank contended that the notices had been issued without jurisdiction. The operation of the notices has remained suspended for approximately seven years.

During the proceedings, Barrister Umer Ijaz Gilani, appearing on behalf of the EOBI, argued that Microfinance Bank employees are not excluded from EOBI protection. He argued that since the Act 1976 does not define the terms “bank” and “banking company”, they must be interpreted in light of the principle of “contemporaneous exposition”.

He submitted that, at the time of enactment, the term “bank” was defined by the Banks Nationalization Act, 1975, which referred primarily to nationalized banks, whose employees were already entitled to generous employment protections. It was therefore argued that the legislature intended to exclude only such employees from the ambit of EOBI who were already enjoying vast statutory rights; therefore, this exclusion should not automatically be extended to employees of microfinance banks, whose employees have no such alternative statutory protections.

At that point, counsel for the petitioner bank, Advocate Asim Imdad, contended that his client was already providing generous benefits to its employees. He also maintained that microfinance banks are also banks within the meaning of the relevant legislation. Although the Microfinance Institutions Ordinance, 2001, initially did not provide sufficient clarity on the issue, subsequent amendments have clarified that microfinance banks are akin to banks. Accordingly, the petitioner argued that the exemption from the EOBI regime enjoyed by banks should also be extended to microfinance banks.

After hearing the preliminary arguments of both the parties, the bench directed the counsels to advance further arguments on the next date of hearing, and adjourned the case until 15th October.

Copyright Business Recorder, 2026