is wholly or partially involved. the events like privatization of financial institutions, liberalization in the economy, stiff competition among the market players, advancements in information technology and telecommunication have brought about newer aspects of complexities along with growth of the banking sector. the increasing complexity in the products being offered by banks and substantial growth in consumer credit has caused a significant increase in the number of complaints with diverse nature of disputes. although sbp continued to redress public grievances against banks, the increasing number of complaints require a reliable and independent source of complaint redressal. therefore, institution of banking mohtasib pakistan was established in 2005 under part vi a of banking companies ordinance, 1962. it may be clarified that jurisdiction of banking mohtasib is well defined and not restricted to maladministration of public sector banks only. the banking mohtasib is competent to entertain complaints from customers, borrowers, banks or from any concerned person. in the first instance, the banking mohtasib has been mandated, under the law, to try and facilitate an amicable resolution or settlement by resorting to mediation, failing which he can pass an order that if not appealed against within a defined timeframe becomes final and operative. as per report of banking mohtasib, it has disposed off 2879 complaints in 2009. while it is a very modest beginning, state bank is assisting banking mohtasib to increase its capacity and outreach to facilitate the aggrieved customers of the bank. sbp ’ consumer protection department : besides direct complaints received from general public, state bank is appellate authority against decisions of banking mohtasib under the same part vi a of banking companies ordinance. till 2008, sbp was handling public complaints through banking policy and regulations department. however, in the wake of increasing number of complaints as also due to its enhanced responsibility as appellate authority against decisions of banking mohtasib, sbp created a specialized department namely, consumer protection department to resolve banking disputes in a more focused and professional manner. the department was able to dispose of 8000 complaints during the year 2008 whereas during 2009 a total number of 13000 complaints were handled. the very objective is to provide a faster, cheaper and efficient way of redressing public grievances and resolving disputes. sbp feels that it has contributed toward reduction of court cases which in the absence of the mechanism were sure to go in courts. in addition, various courts have been sending cases to sb

system. the central bank – bank indonesia has issued detailed circular for banks to avail adr for settling disputes and hence banking mediation has been institutionalized. malaysia has also established financial mediation bureau as an independent body to help resolve disputes between financial institutions and their customers. monetary authority of singapore has been promoting the adr mechanism through educational supportive programs. the central bank of morocco created a system of resolving bank and borrowers disputes. it may be noted that the concept of settling disputes outside court is historically well known to pakistani society in the form of punchayat and jirga etc. the experience of long consumption of time through formal judicial system is very common phenomenon. the courts are over - burdened due to huge backlog of cases. it is in this perspective that law and justice commission of pakistan recommended adr to provide relief to the parties engaged in litigation. accordingly, the government in 2002 had made amendments in civil procedure code under which section 89 b was inserted to empower civil court to adopt adr subject to consent of the parties. a consequential amendment was also made in order x of c. p. c to empower the court to pass necessary orders for expediting the trial proceedings. unfortunately, these provisions have somehow not been fully utilized due to which objective and benefit of these amendments is currently not visible. it would be important to keep in view the fundamentals of banking sector in pakistan while examining the relevance and significance of adr in the prevailing circumstances. besides walk - in customers, over 25 million people currently have regular accounts with banks in pakistan. the deposits of the banking system stand at about rupees 4. 8 trillion whereas loans and advances extended by banks as of december, 2009 were rupees 3. 2 trillion. the amount of nonperforming loans at present is rupees 432 billion. the banks have filed 56320 recovery and execution cases in courts involving rupees 215 billion. the cases filed by borrowers and customers other than recovery suits are in addition to the aforesaid cases. the foregoing facts amply clarifies that there is overreliance on courts for all disputes which the parties cannot resolve themselves. due to high stakes, parties are sensitive to protect their rights. therefore, there is a dire need of putting in place a mechanism of dispute resolution which is speedy, cost effective and just to maintain confidence and continuity of banking transactions. let us look at some elements of existing mechanisms of dispute resolution where sbp