Criminal or civil liability

If customer commits default, under S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001, court is bound to grant costs of funds from date of default till payment or realization

Default of customer, if proved, comes to an end by order of court and customer becomes liable to repay finance with additional amount of cost of funds and financial institution stands compensated

Default of customer to fulfil his obligation is not a criminal offence and can be compensated in terms of money which is business of bank

In finance agreement under Financial Institutions (Recovery of Finances) Ordinance, 2001, intention of both parties is bona fide at the time of entering into agreement, as both wanted to earn profit, that is the reason in Financial Institutions (Recovery of Finances) Ordinance, 2001, word "default" has been used only for the purpose of imposition of penalty in shape of money.