The National Assembly Standing Committee on Finance and Revenue National Assembly Standing Committee on Finance and Revenue has approved the Financial Institutions (Amendment) Bill 2026, granting banks broader powers to recover defaulted loans, including property seizure and public disclosure of defaulters’ identities.
Under the proposed legislation, financial institutions will be allowed to initiate recovery proceedings against borrowers who fail to repay loans within the agreed timeframe.
However, the bill requires banks to issue three formal notices within a 90-day period before taking enforcement action. In cases involving property seizure, banks will also be required to obtain government approval prior to confiscation proceedings.
Minister of State for Finance Bilal Azhar Kayani said the amendment is intended to strengthen loan recovery mechanisms, improve financial discipline, and reduce willful loan defaults within the banking sector.
The proposed framework also places restrictions on properties obtained through housing finance schemes, preventing borrowers from renting out such assets to third parties.
In addition, the bill authorizes competent authorities to publicly disclose the names and addresses of loan defaulters as part of efforts to enhance transparency and discourage intentional non-payment.
The proposed amendments are expected to impact banking operations, housing finance regulations, and loan recovery procedures across Pakistan once formally enacted.
