The National Assembly Standing Committee on Finance approved the Financial Institutions Amendment Bill 2026, which could expand banks’ powers over the property of loan defaulters in Pakistan.
The proposed law allows banks to take possession of a borrower’s property in loan default cases after issuing three notices over 90 days, according to details presented before the committee.
Bilal Azhar Kayani clarified that banks must formally approach the federal government before taking possession of any property.
The bill also proposes public disclosure of a defaulter’s name and residential address in newspapers, drawing objections from committee member Javed Hanif.
Hanif argued that publishing names and addresses would violate human dignity.
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The proposed legislation also places stricter conditions on house financing customers by barring them from renting financed properties to third parties.
Borrowers would retain a settlement window under the bill. A defaulter who secures the required funds may submit a written request to the bank within 30 days to settle the outstanding amount.
The committee chairman said the legislation provides extensive protection for banks but offers only limited safeguards for consumers.
Committee members cautioned that stricter home loan requirements could worsen financial hardship for borrowers.
