LAHORE: Some public sector corporations dealing with the promotion of small industries in provinces are not conducting auction proceedings transparently.

These corporations are auctioning mortgaged properties not only arbitrarily but also in clear negation of the relevant mandatory requirements, said sources.

It is pertinent to mention that where a mortgagor fails to pay the amount of loan, the financial institutions are authorised to sell the mortgaged property or any part thereof by public auction and appropriate the proceeds towards total or partial satisfaction of the outstanding mortgage money.

However, the financial institutions are bound to evaluate the mortgaged property by a reputable valuation company on the panel of Pakistan Banks Association on the date of the final notice to the mortgagor.

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The financial institutions are also required to publish a notice in one English daily newspaper with wide circulation and one reputable Urdu daily newspaper with wide circulation in the province in which the mortgaged property is located.

The sources said the authorities at some public sector financial institutions carry out mortgage process in utter disregard to the observations made by the relevant banking forums.

The sources said that these corporations do not take into consideration mandatory requirements of publication/ advertisement of auction and prefer to restrict it to Urdu newspaper while avoiding the English language newspapers.

Also, the auction of the mortgaged property is conducted at the office of Assistant Directors of the corporations whereas it should be at spot at mortgaged property to fulfil the spirit of public auction.

They said it is mandatory for the financial institutions to publish a notice in one English daily newspaper and one Urdu daily newspaper with wide circulation in the province of where the mortgaged property is situated.

It should also specify particulars of the mortgaged property including name and address of the mortgagor, details of the mortgaged property amount of outstanding mortgage money, and indicating the intention of the financial institution to sell the mortgaged property.

Moreover, the financial institution should also send such notices to all persons, who, to the knowledge of the institution, have an interest in the mortgaged property as mortgagees. The financial institutions also fail to submit auction report within 30 days of the auction. In some cases, they said, this is submitted after a lapse of 13 months.

Copyright Business Recorder, 2023