THE FINANCIAL INSTITUTIONS (RECOVERY OF FINANCES) ORDINANCE, 2001 ORDINANCE NO. XLVI OF 2001 AN ORDINANCE
THE FINANCIAL INSTITUTIONS (RECOVERY OF FINANCES) ORDINANCE, 2001 ORDINANCE NO. XLVI OF 2001 AN ORDINANCE THE FINANCIAL INSTITUTIONS (RECOVERY OF FINANCES) ORDINANCE, 2001 ORDINANCE NO. XLVI OF 2001 AN ORDINANCE to repeal, and, with certain modifications, re-enact, the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997. WHEREAS it is expedient to repeal and with certain modifications, re-enact the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, for the purposes hereinafter appearing; AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action; NOW, THEREFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999 and Provisional Constitution Order No. 1 of 1999, read with the Provisional Constitution (Amendment) Order No. 9 of 1999, and in exercise of all powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following Ordinance:- Short title, extent and commencement.- (1) This Ordinance may be called the Financial Institutions (Recovery of Finances) Ordinance, 2001. (2) It extends to the whole of Pakistan. (3) It shall come into force at once. 2. Definitions.- In this Ordinance, unless there is anything repugnant in the subject or context¾ a) “financial institution” means and includes ¾ (i) any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a government savings bank, but excludes the State Bank of Pakistan; (ii) a modaraba or modaraba management company, leasing company, investment bank, venture capital company, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company; and (iii) any company authorised by law to carry on any similar business, as the Federal Government may by notification in the official Gazette, specify; b) “Banking Court” means ¾ (i) in respect of a case in which the claim does not exceed fifty million rupees or for the trial of offences under this Ordinance, the Court established under section 5; and (ii) in respect of any other case, the High Court. (c) “customer” means a person to whom finance has been extended by a financial institution and includes a person on whose behalf a guarantee or letter of credit has been issued by a financial institution as well as a surety or an indemnifier; (d) “finance” includes ¾ (i) an accommodation or facility provided on the basis of participation in profit and loss, mark-up or mark-down in price, hire-purchase, equity support, lease, rent-sharing, licensing charge or fee of any kind, purchase and sale of any property including commodities, patents, designs, trade marks and copy-rights, bills of exchange, promissory notes or other instruments with or without buy-back arrangement by a seller, participation term certificate, musharika, morabaha, musawama, istisnah or modaraba certificate, term finance certificate; (ii) facility of credit or charge cards; (iii) facility of guarantees, indemnities, letters of credit or any other financial engagement which a financial institution may give, issue or undertake on behalf of a customer, with a corresponding obligation by the customer to the financial institution; (iv) a loan, advance, cash credit, overdraft, packing credit, a bill discounted and purchased or any other financial accommodation provided by a financial institution to a customer; (v) a benami loan or facility that is, a loan or facility the real beneficiary or recipient whereof is a person other than the person in whose name the loan or facility is advanced or granted; (vi) any amount due from a customer to a financial institution under a decree passed by a Civil Court or an award given by an arbitrator; (vii) any amount due from a customer to a financial institution which is the subject matter of any pending suit, appeal or revision before any Court; (viii) any other facility availed by a customer from a financial institution. (e) “obligation” includes ¾ (i) any agreement for the repayment or extension of time in repayment of a finance or for its restructuring or renewal or for payment or extension of time in payment of any other amounts relating to a finance or liquidated damages; and (ii) any and all representations, warranties and covenants made by or on behalf of the customer to a financial institution at any stage, including representations, warranties and covenants with regard to the ownership, mortgage, pledge, hypothecation or assignment of, or other charge on, assets or properties or repayment of a finance or payment of any other amounts relating to a finance or performance of an undertaking or fulfillment of a promise; and (iii) all duties imposed on the customer under this Ordinance; and (f) “rules” means rules made under this Ordinance. 3. Duty of a customer.- (1) It shall be the duty of a customer to fulfil his obligations to the financial institution. (2) Where the customer defaults in the discharge of his obligation, he shall be liable to pay, for the period from the date of his default till realization of the cost of funds of the financial institution as certified by the State Bank of Pakistan from time to time, apart from such other civil and criminal liabilities that he may incur under the contract or rules or any other law for the time being in force. (3) For purposes of this section a judgment against a customer under this Ordinance shall mean that he is in default of his duty under sub-section (1), and the ensuing decree shall provide for payment of the cost of funds as determined under sub-section (2). 4. Ordinance to override other laws.- The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 5. Establishment of Banking Court.- (1) The Federal Government may, by notification in the Official Gazette, establish as many Banking Courts as it considers necessary to