Law: Banking Companies Ordinance, 1962

Section: 41

(a) Banking Companies Ordinance (LVII of 1962)---Ss. 41 & 42---B.C.D. Circular No.32, dated 26-11-1984 by State Bank of Pakistan---Expression "interest wherever charged", as used in B. C.D. Circular No. 32, dated 26-11-1984---Meaning---Such expression means all interest, whether it be on foreign loan or otherwise. (b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---S. 9---B.C.D. Circular No.130, dated 26-8-1984 by State Bank of Pakistan---Suit for recovery of Bank loan---Charging of interest---Service charges, whether to be included in the debts of borrowers---Loan was advanced by a foreign Bank which was paid in Pak Rupees and the same was to be returned in Pak Rupees---Contention of the plaintiff-Bank was that the transaction was covered under definition of 'foreign loan" and interest could be charged ---Validity--­Case was that of a "loan " as defined in mode (A) of Annexure 1 to B.C.D. Circular No. 13, dated 26-8-1984---Granting and disbursing of loans under mode (A) of Annexure 1 of B.C.D. Circular No. 13, dated 26--8-1984 would not carry any interest and the Banks could recover "service charges" which were not to exceed the proportionate costs of operation---Banks were not allowed to charge the costs of funds and provisions of bad and doubtful debts---Where the finance was such, no amount could be charged beyond the expiry period, as after the sale was complete the seller namely, the Bank only became an unpaid seller---Payment which was unpaid by the purchaser namely the customer, therefore, became a debt or a loan and would be governed by item (A) of permissible modes of financing in Annexure 1 of B.C.D. Circular No.13, dated 26-8-1984---Transaction being a loan, interest was allowed thereon in terms of item (A) of Annexure I of B.C.D. Circular No.13, dated 26-8-1984---High Court allowed only service charges and decreed the suit accordingly. (c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)--- ----S. 9---B. C. D. Circular No. 13, dated 26-8-1984 by State Bank of Pakistan--­Recover v of Batik loan---Interest bearing deposits---Scope---Obligation of Bank was with…

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