In a significant development, the National Assembly Standing Committee on Finance approved amendments to Pakistan’s financial institutions law on Thursday, permitting banks to take possession of properties from loan defaulters following multiple notices. The committee, chaired by Naveed Qamar, passed the Financial Institutions (Amendment) Bill 2026 during a session held in Islamabad.
The proposed changes authorize banks to assume control over mortgaged properties if borrowers default on loans after receiving three notices within a 90-day timeframe. Additionally, the bill prohibits borrowers from leasing properties financed through housing loans to third parties.
However, borrowers retain the option to arrange payments and submit a written request to the concerned bank within 30 days to seek relief. The legislation also empowers authorities to take possession of defaulted properties through deputy commissioners once banks request government assistance.
Minister of State for Finance Bilal Azhar Kayani explained that banks would first approach the government, which would then authorize relevant officials to act accordingly. Despite the approval, several lawmakers and officials voiced concerns about specific provisions of the bill.
Committee member Javed Hanif questioned the practice of publishing defaulters’ names and addresses in newspapers, though law ministry representatives noted that similar rules already exist under Order 37 of the law. They also emphasized that tenants renting such properties should not face penalties, assuring that leased properties would not be handed over to banks without resolving tenancy issues.
Officials further highlighted that authorities could assist in mediating payment disputes between banks and borrowers. Pakistan People’s Party lawmaker Nafisa Shah raised concerns about the restriction on renting out bank-financed houses, pointing out that in many countries, borrowers often rent out properties built with bank loans.
Committee chairman Naveed Qamar also expressed reservations regarding the powers granted to deputy commissioners and banks in deciding property possession matters, signaling ongoing debates about the bill’s implications.
