ISLAMABAD: Hearing a matter related to difficulties being faced by borrowers in repayment of small loans, the Islamabad High Court (IHC) observed on Friday that in the prevailing testing times “the state owes a duty of care and duty to rescue those who have obtained loans from micro finance entities”.

IHC Chief Justice Athar Minallah issued notices to the federal government through the finance ministry secretary, governor of the State Bank of Pakistan, chairman of the National Disaster Management Authority and the Rural Support Programmes Network (RSPN), asking them to submit their replies by April 17.

He was hearing an application filed by a citizen, Rafiqur Rehman, who is facing hardships in paying instalments on a Rs75,000 loan he has obtained from RSPN, a microfinance organisation.

The court converted his handwritten application seeking deferment of repayment of small loans of microfinance banks till the lockdown ends into a constitutional petition.

Entrepreneur seeks deferment of repayment of microfinance loans till lockdown ends

The applicant said that he and numerous other people had obtained small loans from the RSPN, non-governmental organisations and microfinance banks.

Under the prevalent situation in the country, he said, a majority of the borrowers could not pay instalments on their loans and were being harassed by officials of the RSPN, NGOs and banks.

Mr Rehman appeared before the court on Friday and said that because of the lockdown his business had been suspended for some weeks and under the prevailing circumstances, it was not possible for him to pay instalments on his loan. He complained that despite the lockdown, he was being harassed by staffers of the RSPN.

He said that he had sent letters to various authorities to seek a remedy, but had not received any response.

He said that the present circumstances were beyond his control and the loan-giving agency was violating his fundamental rights by forcing him to do what had become impossible for him.

The court noted that “the lockdown has indeed suspended all business activities. It, therefore, may have given rise to a situation where the state owes a duty of care and duty to rescue towards those who have obtained loans from the micro finance entities, such as the Rural Support Programmes Network”.

The IHC chief justice observed that ‘the questions raised in this petition involve fundamental rights of not only the petitioner but the general public as well”.

He appointed lawyer Umer Ijaz Gillani and Haseeb Mohammad, president, Islamabad High Court Bar Association, as friends of the court.

The court restrained the RSPN from harassing the petitioner.

It directed the State Bank and the finance ministry to submit a report explaining whether measures had been taken to alleviate hardships being faced by citizens who had obtained loans from microfinance entities.

As per the court order, the respondent authorities “shall also explain whether the state owes a ‘duty of care’ and ‘duty to rescue’ towards the small and medium enterprises during the lockdown period. If the answer is in the affirmative then what measures have been taken to discharge such a duty”.

The secretary of the finance ministry was directed to nominate an authorised officer conversant with relief measures extended to small and medium enterprises and the people who had obtained loans from microfinance entities but were facing hardship in payment of instalments due to the prevailing exceptional circumstances.

Published in Dawn, April 11th, 2020