About a dozen banks in Pakistan have obtained temporary relief from the Islamabad High Court regarding a government-imposed tax on lenders whose borrowing to the private sector falls below a specified target, according to the Pakistan Banks’ Association.

In separate legal cases, the court has temporarily barred the government from collecting taxes based on the banks’ advance-to-deposit ratios until a final verdict is reached on the petitions filed by various banks. Muneer Kamal, Chief Executive Officer of the Karachi-based association representing the nation’s banks, confirmed this development via phone to Bloomberg. The court is scheduled to begin hearing the case on December 3, though the timeline for a final decision remains uncertain.

According to an order by Judge Babar Sattar on November 13, related to an application by Meezan Bank Ltd., “Till the next date of hearing no coercive action will be taken against the petitioner on the basis of any calculation made by the tax department.” This order is available on the court’s website.

The tax was imposed on banks whose loans to the private sector did not exceed 50% of their deposits. This measure is part of Pakistan’s efforts to increase revenue under a $7 billion loan program with the International Monetary Fund (IMF).

Other banks, including MCB Bank Ltd., Askari Bank Ltd., the Pakistani unit of Citigroup Inc., Standard Chartered Bank Pakistan Ltd., and Habib Metropolitan Bank Ltd., have also received similar relief through separate court orders, Kamal noted.

Kamal highlighted that the banking sector is already heavily taxed, with its contribution to national taxes having increased nearly fourfold to 618 billion rupees in 2023 compared to two years ago.