Commercial bank scheduled in Pakistan being regulated by State Bank of Pakistan offer several abundant finance facilities to customers based on their personal as well as business needs. However, during the processing and sanctioning of finance facilities different illegal modes are adopted by banks to secure their transactions and nevertheless take undue advantage over customers through several concealed stipulations not read and consented to by the customer or charging of illegal mark-up, penalties and other charges which are considered illegal by law ending to committing of default by Customer, following which matter shapes up into litigation. For the purpose to protect the rights of customers several laws in Pakistan had been incorporated from time to time against illegal banking practice adopted in Pakistan to defraud customers.
Who is a Customer?
Any person not being a minor, being eligible to contract having disbursed loan, or falls as surety, mortgagor and/or guarantor is referred to as customer in terms of Financial Institutions (Recovery of Finances) Ordinance, 2001
Laws Governing Banking Practice and Procedure
- Financial Institutions (Recovery of Finances) Ordinance, 2001
- Bankers Book of Evidence Act, 1891
- Contract Act, 1872
- Offences in respect of banks Ordinance, 1984
- State Bank of Pakistan Prudential Regulations
- Punjab Consumer Protection Act, 2005
Legal Remedies against Corrupt Banking Practice
Law provides both civil as well as criminal courses for the purpose of redressal of grievance of customer, borrower, security and mortgagor subject to nature of the facts involved in a dispute, against bank and its employees. Some of the common frequent fraud and mal-practices played by Bank are as follow:
- Charging of illegal mark-up
- Charging of illegal fee
- Late Payment Charges
- Charging of default surcharge and other illegal entries
- Fraud and forgery by bankers
- Misappropriating amounts being entitlement of bank
- Misappropriating amounts being entitlement of customer
- Undue advantage over customers
- Procuring signatures of customers on blank documents
- Harassment and blackmailing Customers
We at Hamza and Hamza, being team of experts having immense experience in the field of modern banking laws and practices, have provided extensive legal services including assisting, consulting, negotiating, provided feasibility on banking laws and policy and litigating on behalf of banks and customers at different forums as case may be. We also provide legal opinion with regards to cases already pending before different forums including Banking Court and Court of Appeal. Our team of professional attorneys allows every client to avail a complete range of banking and financing consultation that helps in taking long term profitable decisions. We handle all kinds of documentation from corporate lending papers to indemnities, letters of credit and credit cards.