Attention is drawn to the SHC judgement of 12 May 2004 (suit No B-94 of 2001) in the case of Habib Bank Limited vs. Bela Automotive Industries Limited (BELA). The honourable court has ruled that the bank has repeatedly indulged in the practice of imposing mark-up on mark-up in various accounts of BELA...thereby substantially enhancing the company's liabilities.
Furthermore, the honourable court has directed the State Bank of Pakistan to appoint a chartered accountant from among its approved list to "verify the extent of such liability-inflation against BELA by reviewing all customer accounts from inception".
SBP's CIB records had for many years reflected BELA as a defaulter to the tune of PKR 175 million simply because HBL said so. After extensive follow-up over the past three years, SBP was eventually convinced that the bank's case was questionable. Of its own cognisance, earlier this year the SBP finally removed BELA's name from its CIB list.
This one-off initiative on the part of the central bank, needs to be appreciated. However, the SBP is urged to make it a general policy for inclusion of the borrower names to the CIB list? ie:
-- For borrowers already listed in CIB: Ask for and verify the banks' accounting records to either delete the names of borrowers unjustly included therein, or reflect their default at rational and justifiable amounts; and
-- For fresh additions to CIB list: Require that the banks submit customer acknowledgements along with their requests for such inclusions to CIB...failing which, impugned customers should be summoned to prove that what they owe is less than what is claimed. Only then should new additions be made to the CIB list.
Such a demarche will surely lessen the burden of the country's banking courts and also expedite resolution of bank-borrower conflicts that are holding up the progress of industrialisation.
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