To stabilise the financial institutions, the Financial Institutions (Recovery of Finances) Ordinance, 2001 has been amended which may be called the Financial Institutions (Recovery of Finances) (Amendment) Act, 2016, under which the pecuniary jurisdiction of banking courts has been extended from fifty million rupees to one hundred million rupees.  

Wilful default is an offence under the new enactment. Wilful default, explained under section 2(G) shall be a cognisable, non-bailable and non-compoundable offence under Section 20, and such an offence shall be punishable with imprisonment which may extend to seven years. The loan facilities availed from Pakistani banks in foreign countries would also fall in the definition of Finance, so section 2(c) and 2(d) has been amended. Under section 5 of the Act, no person shall be appointed a Judge of a Banking Court unless he is, or has been, or is qualified to be a District Judge. The written off finance facilities may be opened to trial at any stage without application of any limitation, so in this regard section 8 has been amended.  

The new law also bars the false information in the PLA. The banking court may pass an interim decree under the provisions of section 11. Now, the banking court may set aside an ex-parte decree subject to the payment or deposit on third of the amount of the decree because under section 12, the discretionary power of banking court, as “it thinks fit” has been withdrawn. Section 15, which was declared ultra vires by the honourable Supreme Court (283 PLD 2014 SC.), has been re-enacted under which the financial institution as mortgagee can sell the mortgaged property of the mortgagor under the mandatory requirements of section 15 of the Act. In short, nine sections of FIO, 2001 have been amended which are 1, 2,5,8,10,11,12,15,20. It is expected that Financial Institutions (Recovery of Finances) (Amendment) Act, 2016, would reduce ratio of default regarding to finance facilities, and accelerate the recovery of finances to the Financial Institutions. Actually, amendment in banking law is the need of time. So, circulars need to be issued by Ministry of Law to the banking courts so that FIO, 2001 may be replaced with the Financial Institutions (Recovery of Finances) 

(Amendment) Act, 2016. 

ARSHAD ALI,  

Lahore, March 22.