NA committee approves bill allowing banks to seize mortgaged properties after loan default

The National Assembly Standing Committee on Finance approved the Financial Institutions Amendment Bill 2026 on Thursday, allowing banks to take possession of mortgaged properties in cases of loan default after completion of a formal notice process, according to a news report. 

During the committee meeting, officials informed lawmakers that banks would be required to issue three notices to defaulters within a 90-day period before initiating action to take possession of mortgaged properties.

The proposed legislation also bars borrowers from renting out houses financed through home loans to third parties.

Committee members expressed concerns that the bill appeared to provide stronger legal protection to financial institutions than to consumers.

An amendment was also proposed to permit publication of names and addresses of mortgage defaulters in newspapers.

However, committee member Javed Hanif opposed the proposal, arguing that publication of personal details would be against human dignity.

Minister of State for Finance Bilal Azhar Kayani informed the committee that banks would still be required to approach the government before taking possession of properties under the proposed framework.