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Aishath Muneeza, Ismail Wisham, Rusni Hassan,
International Islamic University Malaysia
arrangements the relationship between the financier and the
financed is different. To cope with this situation and to avoid
dislocation definitions of 'Creditor' and 'Debtor' have been
enlarged through an amendment on December 24, 1980 in
Banking Companies Ordinance 1962. New clauses (dd) and
(ee) have been added in section 5 of the Companies
Ordinance 1962. 1
With these amendments the banker-customer relationship
under the interest-free banking system in Pakistan
continues to remain that of 'debtor' and 'creditor' as before.
The most probable rationale of this is that even in a profit
and loss sharing arrangement the principle sum subject to
adjustments for profit or loss, as the case may be, is
recoverable at the end of the contracted period.
Similarly definition of "loans, advances and credit" has also
been enlarged by adding clause (gg) in section 5 to include
finance provided on the basis of participation in profit and
loss, mark-up in price, lease, hire-purchase or otherwise.
This change in the definition of 'loans, advances and credit is
relevant to many other laws such as State Bank of Pakistan
Act 1956, Banks (Nationalisation) Act 1974, Banking
Companies (Recovery of loans) Ordinance 1979. Further
amendments in various laws have again been made on
December 31, 1984 through a Banking and Financial
Services (Amendment of Laws) Ordinance. The definition of
'Debtor' in section 5 of the Banking Companies Ordinance
1962 has been further changed. Anyone who is provided
'finance' is a 'Debtor'. Through another amendment 'loans,
advances and credit' include 'finance' which has been
exhaustively defined in the Banking Tribunals Ordinance
1 (dd) "Creditor" includes persons from whom deposits have been received
on the basis of participation in profit and loss and a banking company or
financial institution from which financial accommodation or facility has
been received on the basis of participation in profit and loss, mark-up in
price, hire-purchase, lease or otherwise.
(ee) "Debtor" includes a person to whom or a banking company or
financial institution to which financial accommodation or facility has been
provided on the basis of participation in profit and loss, mark-up in price,
hire purchase lease or otherwise''
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