ISLAMABAD - The Supreme Court on Thursday observed that Circular BPD-29 issued by the State Bank of Pakistan for the written-off loans is still being misused and loans continue to be waived off under it, though its term expired in October 2003. State Bank counsel Iqbal Haider admitted that loans written off after 2003 under Circular 29 were illegal. However, he said that the power of writing off loans is with the Board of Governors of the banks. A three-member bench headed by Chief Justice Iftikhar Muhammad Chaudhry was hearing a suo moto case of the written-off loans. The State Bank has waived off loans worth Rs 256 billion from 1971 to 2009. Other two judges on the bench are Justice Muhammad Sair Ali and Justice Ghulam Rabbani. The court was informed that a commission has been constituted that would be led by Justice (retd) Jamshaid Ali Shah who had written note to the chief justice in 2007 for taking suo moto notice regarding written-off loans by the banks. In March, during the proceedings the court was informed that the SBP governor wanted a commission headed by a retired judge. The chief justice asked the SBP counsel what kind of results you want from the Judicial Commission when the loans worth billion of rupees were written off after the expiry of Circular 29. Iqbal Haider said it was the desire of the SBP governor that the commission examine loans of more than Rs 100 million, adding that the politically motivated waived-off loans need to be identified and highlighted. The chief justice said Zari Taraqiati Bank Ltd (ZTBL) waived off billion of rupees loans during the pendency of this deadbeat case in the apex court. He said no action had been taken against the willful defaulters, while criminal cases were filed in various courts against ill-fated citizens. The CJP remarked it had never happened anywhere in the world that principal amount is written off, but in Pakistan the banks waived off principal amount of the barrowers. It seemed that SBP was non-vigilant. The court questioned how many such loans have been written off in the last three years. Justice Sair Ali said the banks approve loans of rich people, who can later get their loans adjusted and get more loans. He said the problem starts with the banking sector which declares any loan 'bad or doubtful. The chief justice inquired the learned counsel of the SBP and private banks if there was any law according to that the bank officer who had approved the loan could be held accountable in case the barrower failed to return it. The CJP stated consortium of banks twice declined to adjust Indus Sugar Mills loan. But one fine morning with the intervention of unseen forces its loans were written off. The mill is still operating and earning profit. Similarly, Red Co Mills got over a billion rupees loan waived off, but the mill sill runs. The CJP further said despite the pendency of the matter in the apex court, not a single barrower has come forward claiming his loan was written off genuinely. The court directed the counsel to get instructions from the SBP governor in view of the court observations about written-off loans. The hearing was adjourned till Monday.