Pakistan Legal

BANKING LAW OF PAKISTAN Pakistan Legal Advisors


Generally, Banking law describes how banks accept deposits and use these funds for credit extensions or investments. It is the bank’s responsibility to comply with a myriad of federal, provincial, and domestic regulations. We provide a wide array of banking law services, including creating, following, and enforcing banking regulations.

Banking Law
Bank Regulations

The regulation of banks, on the other hand, is a form of government regulation that requires banks to adhere to specific requirements, restrictions, and guidelines in order to create market transparency, among others, between banks and the individuals and companies they deal with.

Among the things we deal with are borrowing, raising, or taking up money, lending or advancing money, both with or without collateral, all types of bills of exchange, hundis, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, such as participation term certificates, modaraba & musharika certificates, etc. Trading in bullion and species, buying and selling foreign currency, including foreign bank notes, acquiring, holding, issuing on commission, underwriting, and dealing in stocks, funds, shares, debentures, bonds, obligations, and securities, all types of investments, receiving bonds, scripts or valuable deposits, among other things.

State Bank of Pakistan Regulates Commercial Banks in Pakistan

The commercial banks in Pakistan are regulated by the State Bank of Pakistan, which provides them with a wide range of financial services suited to their personal and business needs.

To secure their transactions, banks use several illegal methods during the processing and sanctioning of finance facilities. In spite of this, they take undue advantage of their customers through concealed stipulations not understood and consented to by the customer or charging illegal markup, penalties, and other charges, which result in the Customer committing a default, which then leads to litigation. In order to protect the rights of customers, several laws in Pakistan have been enacted from time to time against illegal banking practices.


Who is a Customer?

According to the Financial Institutions (Recovery of Finances) Ordinance, 2001, a customer is anyone who is not a minor, eligible to receive a disbursed loan, or is a surety, mortgagor, or guarantor.

Banking Laws and Procedures

  • The Financial Institutions (Recovery of Finances) Ordinance, of 2001, 
  • The Bankers Book of Evidence Act of 1891
  • The Contract Act of 1872
  • Banks Ordinance, 1984 – Offenses against banks
  • Prudential Regulations of the State Bank of Pakistan
  • The Punjab Consumer Protection Act of 2005 protects consumers

The Legal Remedies against Corrupt Banking Practice

Depending on the facts involved in a dispute, the law provides both civil and criminal remedies to resolve grievances against banks and their employees from customers, borrowers, security, and mortgagors. Banks are frequently accused of fraud and mal-practices, including the following:

  • Using illegal markups as a profit margin
  • The charging of an illegal fee
  • Payment charges for late payments
  • Charges for default surcharges and other illegal entries
  • Bankers’ fraud and forgery
  • The misappropriation of bank entitlements
  • Misappropriation of customer entitlements
  • Customers are given an unfair advantage
  • Blank documents need to be signed by customers
  • Blackmailing and harassment of customers

Pakistan Legal Advisors, a team of expert lawyers with extensive experience in modern banking laws and practices, has provided extensive legal services including assisting, consulting, negotiating, providing feasibility on banking laws and policies, and litigating on behalf of banks and customers in different forums. In addition, we provide legal opinions regarding cases that are already pending before different forums, such as the Banking Court and the Court of Appeals. Our team of lawyers provides a complete range of banking and financing consultations to help our clients make long-term profitable decisions. From corporate lending papers to indemnities, letters of credit, and credit cards, we handle all kinds of documentation.

A TEAM OF LAWYERS Specializing in banking

Our banking & finance lawyers arrange loans to buy other companies or finance new ventures. Additionally, they provide legal advice on a wide range of corporate and finance-related matters. Generally, our banking and finance lawyers represent borrowers or lenders (banks or companies).


Banking today is regulated by sophisticated laws and regulations that are constantly evolving. There are many topics covered in banking law and practice that directly impact the day-to-day operations of banks, from contracts to safety and security.

By bank practice, we refer to the part of the seller’s business that focuses primarily on compensation consulting for community banks, executive and director benefits programs, as well as life insurance offered by banks, including incentives, consulting, and developing succession plans with banks.

All of our resources and professional efforts are focused on the specialized field of Federal bank regulatory law. The firm places particular emphasis on and specializes in defending Federally insured financial institutions as well as their officers and directors in all matters pertaining to supervisory bank examinations conducted by all of the Federal bank regulatory agencies to assess compliance with all applicable Federal banking laws, rules, and regulations governing the operations of such institutions.



There are many functions that banks perform, ranging from basic or primary services such as day-to-day transactions in branches to those that are agency-related or general utility services. Banking industry value chains include transactions that are incidental to revenue/sales or sustaining business operations.

The activities and transactions carried out by banks support the operation of their banking businesses. These transactions include making or accepting payments, trading, clearing, and settling accounts, and custody. An understanding of the value chain of the banking industry begins with knowing the operational aspects of banking. The key operational activities include accepting deposits, lending of funds, clearing checks, remittance of funds, lockers & safe deposits, bill payment services, online banking services, credit & debit cards, overseas banking services, wealth management, investment banking, and social objectives.


The firms’ defensive assistance services have been highly regarded by banking institutions throughout Pakistan, including in-house counsel and regularly retained attorneys. Additionally, the firm assists with all types of regulatory applications submitted to Federal banking agencies, as well as defensive assistance when financial institution officers and directors are sued for violations of their legal duties and responsibilities as officers and directors.

Pakistan Legal Advisors provides services around the world to money-center banks, savings and loans, insurance companies, finance companies, institutional investors, investment banks, private banks, trust operations, credit unions, mortgage banking and brokerage firms, and international and foreign banks.

In relation to all aspects of banking law and financial services, our banking law and financial services group represents banks, mortgage companies, other institutional lenders, businesses, and individuals. We represent clients in real estate and commercial lending transactions, as well as consumer transactions, both secured and unsecured. 

Assist clients with consumer lending laws, servicing agreements, brokerage agreements, wholesale agreements, and funding agreements, and negotiate and prepare loan documents.

As part of our services, we also represent banks, mortgage companies, and other lenders on issues involving federal and provincial regulations, new bank charters, and the formation of a holding company. Our services include formations, conversions, branch openings, mergers, acquisitions, and licensing / qualification in jurisdictions across the country. Additionally, it handles all aspects of secondary market transactions, including portfolio purchases, servicing agreements, securitized financing acquisitions, as well as the myriad of business and real estate issues that arise in these types of transactions.