MICROCAPITAL BRIEF: SBP Increases Transaction Limits, Bolsters Alternate Channels to Boost Branchless Banking in Pakistan

The State Bank of Pakistan (SBP) recently announced reforms to the country’s branchless banking regulations in an effort to further the bank’s National Financial Inclusion Strategy (NFIS), launched in May 2015 seeking to deliver financial services to 50 percent of the adult population in Pakistan by 2020. The revised regulations broaden the range of available branchless banking channels to include the 3G and 4G mobile communications spectra, point-of-sale terminals, debit cards for domestic transactions and online banking. The new regulations also institute an Inter Bank Funds Transfer (IBFT) service facilitating transfers to and from branchless banking account holders and non-account holders. The reforms also increase the limit for the value of person-to-person transactions conducted through a biometric verification system from PKR 15,000 (USD 143) per month to PKR 50,000 (USD 478) per month.

SBP’s categorization scheme for branchless bank accounts is also being liberalized. The daily transaction limit for “Level 0” accounts will increase from PKR 15,000 (USD 143) to PKR 25,000 (USD 239), the monthly limit from PKR 25,000 (USD 239) to PKR 40,000 (USD 382), the yearly limit from PKR 120,000 (USD 1,150) to PKR 200,000 (USD 1,910) and the maximum account balance from PKR 100,000 (USD 955) to PKR 200,000 (USD 1,910).

For “Level 1” accounts, which require a higher level of documentation to open, the daily transaction limit will increase from PKR 25,000 (USD 239) to PKR 50,000 (USD 478), the monthly limit from PKR 60,000 (USD 573) to PKR 80,000 (USD 765) and the yearly limit from PKR 500,000 (USD 4,780) to PKR 800,000 (USD 7,640). SBP has set the Level 1 maximum account balance at PKR 400,000 (USD 3,820) as it was previously unrestricted.

The new regulations merge “Level 2” and “Level 3” branchless bank accounts, which can be opened by individuals, organizations or businesses, putting the onus of setting transaction limits on financial institutions, including commercial, Islamic and microfinance banks.

SBP considers these reforms “part of the broader strategy to create [an] enabling regulatory environment to promote [a] Bank-led Model of branchless banking whereby the financial institutions lead the entire branchless banking program, all the responsibilities of program shall rest with the financial institution.”

By Michelle Dold, Research Associate

About State Bank of Pakistan (SBP)

Established in 1948, the State Bank of Pakistan (SBP) is the central bank of the nation of Pakistan. Its primary functions include “issue of notes, regulation and supervision of the financial system, bankers’ bank, lender of the last resort, banker to Government, and conduct of monetary policy.” Its secondary functions include “management of public debt, management of foreign exchange, and other functions like advising the government on policy matters.”

Sources and Additional Information:
[1] Business Recorder: “Revision of Branchless Banking Regulations” by Parvez Jabri, http://www.brecorder.com/pakistan/banking-a-finance/308695-revision-of-branchless-banking-regulations.html

[2] Business Recorder: “Pakistan Formally Launches National Financial Inclusion Strategy” by Shoaib-ur-Rehman Siddiqui, http://www.brecorder.com/top-news/pakistan/277936-pakistan-formally-launches-national-financial-inclusion-strategy.html

[3] “Branchless Banking Regulations For Financial Institutions desirous to undertake Branchless Banking (Revised on July 12, 2016).”, State Bank of Pakistan, http://www.sbp.org.pk/bprd/2016/C9-Annx-A.pdf

[4] MicroCapital Universe Profile: State Bank of Pakistan (SBP)

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