NA panel approves bill allowing banks to seize properties of defaulters

ISLAMABAD: A parliamentary committee on Thursday approved amendments to Pakistan’s financial institutions law that would allow banks to take possession of properties of loan defaulters after issuing multiple notices.

The National Assembly Standing Committee on Finance, chaired by Naveed Qamar, approved the Financial Institutions (Amendment) Bill 2026 during a meeting in Islamabad.

Under the proposed amendments, banks will be allowed to take control of mortgaged properties in cases of loan default after sending three notices to borrowers within a 90-day period.

The bill also bars borrowers from renting out properties financed through house loans to third parties.

The bill said that borrowers would still be able to arrange payment and submit a written request to the relevant bank within 30 days to seek relief.

The proposed legislation also grants authorities powers to take possession of defaulted properties through deputy commissioners after banks approach the government for assistance.

Minister of State for Finance Bilal Azhar Kayani told the committee that banks would first submit requests to the government, which would then authorise relevant authorities to proceed.

Lawmakers and officials, however, raised concerns over several provisions of the bill.

Committee member Javed Hanif questioned the practice of publishing the names and addresses of defaulters in newspapers, while law ministry officials said similar provisions already existed under Order 37 of the law.

Law ministry officials also said tenants renting such properties should not be penalised, adding that authorities would not hand over leased properties directly to banks without settling tenancy-related matters.

Officials further told the committee that authorities could also help resolve payment disputes between banks and borrowers.

Pakistan People’s Party lawmaker Nafisa Shah said that in many countries people obtain bank loans to build houses and later rent them out, questioning restrictions proposed in the bill.

Committee chairman Naveed Qamar also expressed reservations over granting deputy commissioners or banks powers related to property possession decisions.