The State Bank of Pakistan (SBP) has amended the existing Branchless Banking Regulations for Financial Institutions (FIs), which include commercial, Islamic and microfinance banks, for expanding the outreach of branchless banking operations in the country.
These amendments in the Regulations shall be immediately applicable to all potential FIs. Financial institutions, which have already been allowed to offer branchless banking services, have been advised to streamline their existing operations/processes as per amended Regulations, within six months, and report compliance to SBP, according to BPRD Circular No 09 of 2011.
According to these amendments, SBP has introduced Level '0' Branchless Banking (BB) Accounts to bring the low income earning segment of society into financial services loop. With the introduction of Level '0' BB Accounts, now, instead of sending the physical Account Opening form and copy of customer's CNIC to the financial institution (FI) for further processing, the branchless banking agents have been allowed to send the Digital Account Opening form, customer's digital photo, and an image of customer's CNIC to the FI, electronically.
The new category of Level '0' BB Account will provide flexibility to the agent and the financial institution (FI) for opening of basic BB accounts while rationalising the 'Know Your Customer' (KYC) requirements in line with the transaction limits. The following transaction and maximum balance limits on Level "0" Accounts shall be applicable: Daily Limit Rs 15,000; Monthly Limit Rs 25,000; Annual Limit Rs 120,000; and Maximum Balance Limit Rs 100,000.
Similarly, the transaction limits of Level 1 Branchless Banking Accounts have been reasonably increased to cater to the needs of the customers by rationalising the 'Know Your Customer' (KYC) requirements. Now, all services permissible under existing Branchless Banking Regulations shall be available to Level "1" account holders.
The transaction and maximum balance limits applicable to Level "1" Accounts will be: Daily Limit Rs 25,000 (previous limit was Rs 10,000); Monthly Limit Rs 60,000 (previous limit was Rs 20,000); and Annual Limit Rs 500,000 (previous limit was Rs 120,000). There will be no Maximum Balance Limit, according to the amendments.
Other salient features of revised/amended Branchless Banking Regulations are as under:
--- All BB account holders shall be allowed to transfer up to Rs 25,000 per month to non-account holders.
--- Financial institutions (FIs) are allowed to provide Person-to-Person funds transfer service to customers (senders and receivers) up to the transaction limit of Rs 15,000 for one customer in a month.
--- Persons availing this service shall be registered by the FI after due verification process for subsequent transactions.
--- During the verification of customer data from Nadra, if it is found that the agent has opened any customer account or has processed a funds transfer transaction on the basis of a fake or incorrect information/document, the FIs shall take appropriate penal action including blacklisting of agent or termination of agency agreement. FIs shall devise mechanism for ongoing agent supervision and monitoring.
--- The FIs shall formulate standardised guidelines for capturing customers' photograph and image of CNIC at agent locations to prevent impersonation of identity.
--- The requirement of throughput limit has been withdrawn on Level "1" BB Accounts. However, throughput requirements shall not be applicable on newly introduced Level "0" accounts as well.
--- The Branchless Banking account holders shall be able to pay their utility bills without exhausting their BB account limits.
--- Keeping in view the Level of BB Account, the transaction limits allowed and the Risk Profile of each customer, the FIs' system should be capable of carrying out effective due diligence on a continuous basis.
--- The phrase "Transaction Processing System (TPS)" has been replaced with "Third-Party Service Provider (TPSP)". FIs shall enter into arrangement with TPSP after obtaining prior regulatory approvals.
--- FIs are allowed to open multiple Level 2 and Level 3 Accounts of the branchless banking customers after due KYC procedure defined for the regular bank account.
--- FIs are allowed to maintain branchless banking customer accounts as remunerative accounts in order to encourage opening of more accounts. FIs shall develop a remuneration mechanism for all Levels of BB accounts.
--- FIs entering into Branchless Banking shall be required to submit quarterly reports on financial data of BB initiatives to State Bank of Pakistan on a prescribed format and shall also provide, on monthly basis, the customers' complaints of fraud and forgery incidents and the action taken by FIs.
--- To ensure success of the BB initiative, FIs should have a policy of zero tolerance for fraudulent activities.
--- FIs should have a proper policy framework in place on taking penal action against the branchless banking agents in case it is established that the agent is involved in any kind of fraud, forgery, misinformation and misreporting, etc.