Blanket Immunity for Banks Questioned as Finance Committee Flags Harsh Foreclosure Powers Against Borrowers
Nadeem Tanoli
Islamabad: The Standing Committee on Finance and Revenue has raised serious concerns over proposed legal protections for financial institutions and their officials, warning that blanket immunity under the cover of “good faith” should not become a routine part of legislation. Chairman Syed Naveed Qamar said legal protections must not be one sided; they should either apply fairly to both parties or not be extended in a manner that shields institutions while leaving borrowers exposed.The committee, chaired by Syed Naveed Qamar at Parliament House, conducted a detailed clause by clause review of proposed amendments to the Financial Institutions Recovery of Finance Amendment Act. The discussion focused particularly on the newly introduced Section 15A, which deals with housing finance and foreclosure procedures.The most sensitive issue before the committee was the proposed foreclosure mechanism for housing finance. Members expressed concern that if the law passes without proper safeguards, it could become extremely harsh for borrowers and ordinary citizens, especially those facing financial hardship or temporary default.The committee observed that banks and financial institutions do need legal tools to recover defaulted loans, but such powers must be balanced with fairness, accountability and protection for citizens. Members stressed that recovery laws should not allow financial institutions to act arbitrarily or use foreclosure powers in a way that creates undue pressure on borrowers.Chairman Syed Naveed Qamar strongly objected to broad indemnity clauses that provide extensive protection to financial institutions and their officials. He said such boilerplate clauses, especially those granting immunity under the phrase “good faith,” should not be inserted into legislation as a standard practice without proper scrutiny.Members also raised broader concerns over the increasing trend of giving sweeping powers to institutions without matching accountability mechanisms. They said any new recovery framework must include meaningful remedies, appeal rights and legal protections for affected borrowers.The committee directed the concerned ministry and stakeholders to incorporate its agreed amendments and observations into the revised draft before the bill is taken up for further consideration.
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