PHC bars banks from loans recovery in Malakand

PESHAWAR: The Peshawar High Court (PHC) on Friday suspended the State Bank of Pakistan (SBP) notification issued to the employees of banks in the militancy-hit Malakand division in which they were asked to pay back loans written off by the federal government.

A two-member PHC bench comprising Justice Ejaz Afzal Khan and Justice Mazhar Alam Miankhel gave the verdict in a writ petition filed by about 356 bankers from Malakand division including Younas Mohmand and Muhammad Iqbal.

The bench directed the managers of all the banks to stop deduction from the employees as loan recovery till next decision of the court.The bench also issued notices to managers of SBP, Allied Bank, Habib Bank, United Bank, National Bank of Pakistan, Muslim Commercial Bank and Bank of Khyber to appear and explain their position as to why they issued recovery orders after the federal government notification on waiver of the loans.

The petitioners claimed that on February 2, 2011 the State Bank in pursuance of the prime minister’s orders issued a circular to all banks not to recover loans outstanding as of December 31, 2009 against the borrowers in Malakand Agency and Swat, Buner and Chitral districts. The bank employees were exempted from the order.

The petitioners claimed that the SBP decision was in violation of the federal government notification under which the prime minister had announced waiver of loan to all borrowers whether government employees, farmers or common people residing in the militancy-hit Malakand division.

The petitioner’s lawyer Mian Iqbal Hussain contended that for providing relief to the war-affected districts of Khyber Pakhtunkhwa the prime minister had announced at the Kissan Convention 2009 the relief package for cancellation of small-scale farmers’ agricultural loans including both farm and non-farming having outstanding balances as on June 30, 2009 in all the districts of Malakand division.

He said the SBP first issued a circular to all the banks on December 2, 2009 under which loans were written off to small farmers of Malakand and Fata.The criteria of small farmers including all those holding 12.5 acres land and in the case of non-farm sector having stock of 20-50 cows/buffalos and up to 150 goats/sheep, poultry up to 5,000 birds/broilers and 1,000 birds, etc. He said the prime minister on December 31, 2009 again announced total waiver of loans in Malakand Agency, Buner, Swat and Chitral districts as fiscal relief to rehabilitate the economic life in Khyber Pakhtunkhwa, Fata and the Provincial Administered Tribal Areas.

Posted in: Chitral,NWFP