Supreme Court questions legal grounds of loans written off by ZTBL

Chief Justice of Pakistan Iftikhar Muhammad Chaudhry on Thursday observed that Zarai Taraqiati Bank Limited (ZTBL) had written off billions of rupees loans without taking into account the legal implications, as Circular 29 of State Bank of Pakistan (SBP) was only for one year period ie, 2002-03, adding that the practice is continued unabated despite the suo motu case regarding the matter is pending with the apex court.
A three-member bench headed by Chief Justice Iftikhar Muhammad Chaudhry with Justice Muhammad Sair Ali and Justice Ghulam Rabbani was hearing a suo motu case regarding Rs 256 billion written-off loans by different banks from 1971 to 2009. The SBP counsel Syed Iqbal Haider told the bench that Circular 29 was issued on October 15, 2002 by the State Bank of Pakistan that provided grounds to write off bad debts.
The chief justice observed that loans worth billions of rupees had been written off during the last two years, adding that everybody know that what has to be done for borrowing from the bank. "Despite the fact the matter is pending with the court no one has the courage to admit that his loan is not recoverable," he observed.
The chief justice asked Iqbal Haider to assist the bench that what was the genesis in term of law that provided grounds to write off loans worth billions of rupees, saying that everybody is aware about proceedings of suo motu case relating to written of loans in the apex court. But Zarai Taraqiati Bank Limited (ZTBL) has paid no heed and went on to write off billion of rupees loans despite knowing that the case is pending in the court, he added. "This is the respect the national institutions are paying to the court," Justice Chaudhry remarked sarcastically.
He asked Syed Iqbal Haider to inform the governor State Bank about the attitude of the financial institutions while dealing with precious national wealth. The chief justice emphasised that instead of constituting commission on written off loan, the Central Bank should withdraw the Circular 29 which is still in practice illegally, as it was issued for only one year.
The bench observed that after getting the loans written off, people use the amount to run other businesses, adding that an ordinary person can not even enter the bank, whereas the looters of national wealth kept multiplying their wealth. The chief justice asked Iqbal Haider to inform the governor of State Bank that the court would stand by him if he convince the SBP to withdraw Circular 29 and 3, saying, "Pakistan is our country and we must respect its laws." The court also asked the SBP counsel to assist it whether there was any law under which action could be taken against a bank officer, who extend loan without properly following the rules.
During the course of hearing, Justice Muhammad Sair Ali ruled that all the adjusted cases after the expiry of Circular 29 in 2003 were illegal, adding that banks only lend to rich who have the capacity to return the loan, by and large, but there are people who got waiver and adjustment and built empires. The hearing was adjourned till May 30.