When a borrower defaults, banks in Pakistan typically sue for recovery under the Financial Institutions (Recovery of Finances) Ordinance, 2001, before a specialised Banking Court. These courts move faster than ordinary civil courts and follow their own procedure, which catches many defendants off guard.
A distinctive feature of this law is the requirement of 'leave to defend'. After being served, the defendant must, within the prescribed period, file an application setting out the substance of their defence and disclosing details such as amounts borrowed, repaid and disputed. If leave to defend is not sought properly and in time, the court can decree the suit straight away.
That does not mean the borrower is without remedy. Genuine defences are routinely available — for example, disputes over the actual amount outstanding, improperly applied mark-up or charges, failure of the bank to give credit for payments made, defective documentation, or non-compliance with the bank's own obligations. The key is to plead these specifically and back them with figures and records.
Equally important is engaging early. Once a recovery suit is filed, options such as restructuring, settlement or a properly framed defence narrow quickly as deadlines pass. Acting on the day the summons arrives, rather than weeks later, often changes the outcome.
TFMC represents both borrowers and institutions in banking matters. If you have received a recovery notice or summons from a Banking Court, send it to us immediately so we can assess your position and protect it within time.