Banking Industries Updates

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Artificial intelligence and innovative ways: More people to be brought into tax net: Tarin


Zaheer Abbasi
06 Aug 2021

ISLAMABAD: The Federal Minister for Finance and Revenue, Shaukat Tarin Thursday said that efforts are under way to bring more people into the tax net by using artificial intelligence and innovative ways.

The minister was chairing a meeting of the Apex Committee on broadening the tax base and integration of retail businesses.

He underlined the importance to keep the momentum of July 2021 revenue collection for the coming months as well for achieving Rs5.8 trillion revenue collection for the current fiscal year.

“Finance minister directed FBR to continue its diligent efforts for enhancing tax collection”.

An official said that the FBR also updated the finance minister about the measures being taken to bring the retail sector into the tax net.

The meeting was attended by Special Assistant to Prime Minister on Finance and Revenue Dr Waqar Masood, chairman FBR and other senior officers.

The finance minister stated that the FBR record revenue collection during the month of July 2021 equal to Rs413 billion which is 21 percent above the set target for the month.

He further stated that July’s revenue collection is a reflection of the government’s prudent policies for sustained economic growth. This clearly indicates that fiscal consolidation efforts are on track with key focus to broaden tax base by using artificial intelligence and innovative ways for bringing more people into the tax net, he added.

Copyright Business Recorder, 2021

 

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SBP hits eight banks with penalties

Charges them for violating regulations including AML, CFT and foreign exchange rules


Salman Siddiqui
August 08, 2021

Pakistan’s central bank has charged eight banks with monetary penalties totalling at over half a billion rupees for violating regulations including anti-money laundering (AML), combating financing of terrorism (CFT) and foreign exchange rules during the quarter ended June 30, 2021.

The State Bank of Pakistan (SBP) has time and again directed banks to ensure compliance with banking regulations including AML, CFT and foreign exchange regulations. It has adopted strictness over implementation of such rules in financial transactions in letter and spirit, as the country is making efforts to escape the Financial Action Task Force’s (FATF) grey list.

“In addition to penal action, the bank has been advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials,” SBP directed one of the top five banks in the country.

A leading bank was charged Rs289.09 million for “violation of regulatory instructions pertaining to AML/CFT and general banking operations,” it said.

The regulator found at least four banks that compromised money laundering and terror financing regulations and directed all of them to conduct internal inquiry on violation of regulatory instructions and take disciplinary action against the officials found involved.

The regulator (SBP) has hit eight banks with penalties ranging from Rs10-290 million, totalling at Rs525.24 million under the subject “details of significant enforcement actions by SBP during the quarter ended June 30, 2021,” according to a statement issued by the central bank. Other banks, mostly tier-II ones, were hit with penalties for violating rules related to foreign exchange, customer due diligence (CDD) and know-your client (KYC). Gathering of incomplete information about the clients may let criminal elements get access to banks and conduct illegitimate financial transactions.

Read SBP reserves rise $16m to $17.8b

“These actions (monetary and disciplinary) are based on deficiencies in compliance of regulatory instructions and do not constitute a comment on the financial soundness of the entities,” the central bank said.

In October, SBP directed financial institutions to invest in technology and human resources to create an enabling environment to detect illegal financial transactions and bound staffers to maintain secrecy of the likely suspected transaction. It also asked them to report the development to the Financial Monitoring Unit (FMU).

“Accordingly, all SBP REs (regulated entities) shall implement automated transaction monitoring systems (TMS) capable of producing meaningful alerts based on pre-defined parameters/ thresholds and customer profile, for analysis and possible reporting of suspicious transactions.

“Furthermore, SBP REs shall establish criteria in their AML/CFT/CPF policies and/or procedures for management of such alerts. The adequacy of staff posted for effective monitoring and reporting of STRs is a critical factor of customer due diligence,” it said.

Training to employees directly/indirectly responsible for AML/CFT/CPF shall enable them to understand new developments, money laundering and financing of terrorism techniques, methods and trends, it told the REs.

The REs included banks, development finance institutions, microfinance banks, exchange companies, payment system operators, payment service providers, electronic money institutions and third party payment service providers.

Published in The Express Tribune, August 8th, 2021.

 

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ECC approves NRLP structure, financial impact to incentivize remitters

11 Aug 2021,


ISLAMABAD, Aug 11 (APP): The Economic Coordination Committee (ECC) of the Cabinet Wednesday approved the structure and estimated financial impact of the National Remittance Loyalty Program (NRLP), a mobile application for which is scheduled to be launched in October 2021.

The NRLP programme is being introduced with a view to incentivize remitters to transfer funds through formal channels, thus further strengthening the inflow of remittances.

Chairing the ECC meeting, Federal Minister for Finance, Shaukat Tarin directed to exercise due diligence before the launch for seamless integration with all service providers to ensure smooth working of NRLP.
Earlier, Secretary Finance gave a detailed presentation on NRLP, stating that remittances form backbone of the economy.

He said, the proactive policy measures by the government and the State Bank of Pakistan (SBP) have incentivised the overseas Pakistanis and encouraged them to remit their hard earned money through formal channels.

The use of formal channels has contributed in achieving record remittance of $29.4 billion in the last fiscal year, the secretary said adding that it was a clear reflection of confidence in Pakistan’s economy by overseas Pakistanis.

In order to continue the positive trajectory of remittances, the State Bank of Pakistan would introduce a mobile application, NRLP, which would offer incentives/rewards to overseas Pakistani against each remittance transaction in accordance with a set criteria.

The above application would be formally launched towards the end of October 2021, the secretary added.

Governor State Bank of Pakistan Mr. Reza Baqir also participated in the meeting through a video link.

 

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Pakistan's net international reserves set to increase: SBP governor

• Dr Reza Baqir says IMF's newly-approved SDR allocation could not have come at a better time for Pakistan that is in recovery mode
• No alarm bells for Pakistan's economy, adds central bank chief

BR Web Desk
13 Aug 2021


Net international reserves (stock) of the SBP are defined as the dollar value of the difference between usable gross international reserve assets and reserve-related liabilities, evaluated at the program exchange rates, according to the IMF.
Baqir, addressing a press conference in Islamabad, said the newly-approved SDR allocation of the IMF could not have come at a better time for Pakistan that is seeking higher economic growth in the ongoing fiscal year.

"The import cover will also increase with this new allocation," said Baqir, adding that foreign exchange reserves will reach a historic high with the new SDR allocation.

While Pakistan's stock of foreign exchange reserves is over $24.6 billion, those held by the central bank are at a little over $17.6 billion, according to the latest data. External debt repayments and Covid-19 vaccine procurement were cited as reasons for the weekly fall in foreign exchange reserves, said the SBP on Thursday.

The level of reserves is an important figure for Pakistan, which needs the dollar-stock to pay for imports. With the government seeking higher economic growth, pressure on dollar reserves is likely to increase.

This leads to a higher current account deficit that eventually erodes SBP-held foreign exchange reserves.

The current account deficit has been widening in recent months, putting pressure on the currency as well.

Baqir, however, said the current account deficit is projected to stay between 2-3% of GDP this fiscal year, which is manageable.

"This is a different case," said the SBP governor. "The current account deficit was at 6% of GDP back in 2016 when this problem happened.

"However, this time around - like SBP said in its monetary policy announcement - the current account deficit is projected to stay between 2-3% for this fiscal year. This is what happens in emerging markets that are targeting growth."

Baqir added that none of the 'three alarm bells' is ringing in Pakistan's case.

"The level of the current account deficit is not at the level where things become unsustainable. Secondly, the exchange rate is adjusting with the increasing deficit. The market naturally adjusts when outflow is greater than inflow (of foreign currency).

"Had the exchange rate not been adjusting, then that is an alarm bell. But the rate is adjusting.

"Thirdly, the (foreign currency) reserves are increasing. In the past, they decreased. At present, none of these three alarm bells is ringing. Reserves are increasing, the market-based exchange rate is adjusting both ways.

"In the broader context, if we are talking about the current account deficit, then this is a good sign. We aren't talking about a recession, which we used to discuss two years ago."

Pakistan registered its first recession in over seven decades in the fiscal year that ended June 2020, followed by a growth of 3.94% in the very next fiscal year (2020-21).

Baqir said this year the SBP sees a growth of 4-5%.

Background of new IMF allocation

On Thursday, Finance Minister Shaukat Tarin said Pakistan is set to receive $2.77 billion from the IMF on August 23, confirming earlier reports that the Washington-based lender's increased lending capacity would boost the country's foreign exchange reserves.

The boost comes after the IMF board of governors greenlit increasing the institution's lending capacity by $650 billion, the last step in approving an initiative to boost aid to the most vulnerable countries.

The program, which had already been approved by the IMF's executive board in mid-July, will be implemented on August 23.

The newly issued SDRs will be allocated to member countries in proportion to their IMF quota. Emerging and developing nations are to receive around $275 billion in total with Pakistan set to get $2.77 billion.


What are SDRs

Created in 1969, SDRs are not a currency and have no material existence.

Their value is based on a basket of five major international currencies: the dollar, the euro, the pound, the renminbi or yuan and the yen.

Once issued, SDRs can be used either as a reserve currency that stabilises the value of a country's domestic currency, or converted into stronger currencies to finance investments.

For poorer countries, the interest is also to obtain hard currencies without having to pay substantial interest rates.

 

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Roshan Digital Account inflows cross $2bn in less than 12 months

• SBP shares milestone in Twitter post

Ali Ahmed
16 Aug 2021

Cumulative deposit inflows under the Roshan Digital Account (RDA) have crossed $2 billion in less than 12 months, stated the central bank.


“Roshan Digital Account crosses the historical milestone of $2bn in deposits. A big thanks to Overseas Pakistanis for their overwhelming response to the RDA initiative,” said the State Bank of Pakistan in a tweet post.

The RDA, an initiative of the SBP in partnership with major banks operating in Pakistan, is aimed at facilitating Non Resident Pakistanis (NRPs) to invest in the country.

The RDA enables opening an account without requiring physical presence either in Pakistan or in any embassy or consulate. It has also facilitated NRPs in conducting banking, payment and investment activities in the country.

NRPs can invest in Naya Pakistan Certificates, the stock market, and real estate through RDA.
Funds in these accounts can be fully repatriated without any prior approval from the SBP.

Overseas Pakistanis play a vital role in Pakistan's economy that continues to battle rising external debt and a high current account deficit in the shape of remittances, which reached a historic high of $29.4 billion during the last fiscal year.

Days ago, the SBP initiated the National Remittance Loyalty Programme (NRLP) for overseas Pakistanis that would eventually enhance the inflow of foreign currency into the country.

Prime Minister of Pakistan Imran Khan approved NRLP in-principle and set the deadline for its formal launch as of October 01, 2021.

Under the NRLP various incentives/rewards will be offered to Overseas Pakistanis for sending remittances to Pakistan based on the point's accumulation structure.

An Android and iOS based Mobile App (both English & Urdu) has also been developed for this purpose by 1-Link whose development cost has been borne by the banks.

 

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SBP soon to launch new data portal SAAD

August 23, 2021

The State Bank of Pakistan (SBP) has announced on Monday that it will launch a new data portal SBP Asaan Adaad (SAAD) which would be focused on economic development indicators.

SBP stated that the new portal will enable users to easily access, visualize and download the economic data covering monetary, the balance of payments and other sectors of the economy.

 

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SBP fully digitises forex approval system

Forex-focused scheme lends support to ease of doing business in Pakistan


Our Correspondent
August 24, 2021

A Reuters file image of SBP logo

KARACHI: The State Bank of Pakistan (SBP) has completed the digitisation of the Regulatory Approval System (RAS) for foreign exchange cases to lend support to ease of doing business in Pakistan. In a statement on Monday, the central bank pointed out that it initiated the process of end-to-end digitalisation of foreign exchange cases with an objective to enhance ease of doing business in the country.

The scheme is envisaged to provide a fully digitalised platform to the business community and individuals, who are approaching banks to lodge their foreign exchange-related requests with the SBP. The project was divided into two phases, it said. In the first phase, banks were linked with the SBP FX RAS on March 24, 2020 which enabled banks to submit foreign exchangerelated cases electronically for regulatory approval of the SBP and SBP-Banking Services Corporation (BSC), it said.

The system has embedded features of providing transparent case tracking mechanisms through emails to customers and case status information option on the SBP website. “This initiative significantly enhanced operational efficiency and resulted in cost reduction, improved transparency and led to faster decisionmaking at the SBP and banks,” the central bank highlighted.

 

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The Securities and Exchange Commission of Pakistan (SECP) has introduced major capital market reforms featuring legal, structural, regulatory, operational, and product development initiatives for robust and transparent capital market in the country.

The capital market reforms are focused to ensure provision of complete eco-system desirable for the capital formation.

 

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FBR sets Rs1200bn revenue collection target for Q1

Sohail Sarfraz
29 Aug 2021

ISLAMABAD: The Federal Board of Revenue (FBR) has fixed Rs1200billion as the revenue collection target for the first quarter (July-September) 2021-22 to meet the annual target of Rs5829billion for the new fiscal year.

Sources told Business Recorder, here on Saturday that based on the tax projections of Rs1200billion for the first three months of 2021-22, the FBR has fixed month-wise targets for the first quarter of the current fiscal year.

So far, the tax machinery has provisionally collected net revenue of Rs413billion during July, which has exceeded the target of Rs342billion by Rs71billion. Now the FBR has to collect Rs858 billion in August and September to meet the quarterly target of Rs1200 billion.

According to the provisional information, the FBR has collected net revenue of Rs413billion during July 2021, which has exceeded the target of Rs342billion by Rs71billion.

This represents a growth of about 36 percent over the collection of Rs303billion during the same period last year. These figures would further improve before the close of the day, and after book adjustments have been taken into account, the sources say, adding these collections are the highest ever in the month of July. This outstanding revenue performance is a reflection of sustained economic revival spurred by government policies.

On the other hand, the gross collections increased from Rs317billion during this period last year to Rs419 billion, showing an increase of 32.1 percent.

The amount of refunds disbursed was Rs20billion compared to Rs15.7billion paid last year, showing an increase of 26.6 percent.

This is reflective of the FBR’s resolve to fast-track refunds to prevent liquidity shortages in the industry, despite, facing the challenge of the fourth wave of Covid-19.

Income tax returns for tax year 2020 have reached 3.53 million compared to 2.72 million in tax year 2019, showing an increase of 30 percent.

The tax deposited with returns was Rs51 billion compared to only Rs33 billion last year, showing an increase of 54 percent.


Copyright Business Recorder, 2021

 

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Bank liabilities outgrow assets in FY21

Bank borrowing from SBP, inter-bank channels shoots 43.6% to Rs4.26tr in FY21


Salman Siddiqui
August 29, 2021


KARACHI: Banks have gradually increased their dependence on borrowed money to continue performing their operations over the past one year, as requirement for money to meet the demand of depositors and borrowers went up amid Covid-19 in Pakistan.

Accordingly, the size of banks’ liabilities has grown at a faster pace than their assets, slashing their net worth in the fiscal year 2020-21 compared to the preceding fiscal year 2019-20.

Bank borrowing from the State Bank of Pakistan (SBP) and the inter-bank channels shot 43.6% to Rs4.26 trillion in FY21 compared to Rs2.97 trillion in FY20, according to Pakistan central bank’s data uploaded on Friday.

Interestingly, the borrowing by banks went up notably despite the fact that deposits of bank accountholders rose by just 17.5% to Rs20.44 trillion over the past one year, suggesting there was ample liquidity available in the banking system to meet its clients’ requirement.

The increased borrowing, in addition to growth in deposits, played a key role in widening liabilities sharply by 20.1% in FY21 compared to 13.4% in FY20. On the other hand, the assets also surged 18.9% in FY21 compared to 14.4% in FY22, but the pace of growth in assets was lower compared to liabilities.

AHL Research Economist Sana Tawfik said that borrowing by banks increased as the central bank kept in view the outlook for increased demand for money in the system during the two Eid festivals that took place in May and July 2021.

She said that the receipt of workers’ remittances from overseas Pakistanis have continued to play a key role in enhancing deposits of bank accountholders.

“The occurrence of Eid festivals in recent months, however, slowed down the remittances on the back of prolonged holidays in the two months in Pakistan and in Gulf countries where majority of Pakistanis live,” she said.

The receipts of workers’ remittances has remained robust and over $2 billion per month were received under this head for the past 14 months. They grew strongly by 27% to $29.1 billion in FY21.

According to her, the remittances were expected to remain strong going forward and they would continue to play a vital role in lifting banking deposits to the next level.

She said that enhanced borrowing by banks does not mean that they have increased level of risk in doing business.

“They have apparently borrowed from the central bank (which is a regulator as well) which carries almost no risk,” she said.

She said that the growth in assets come with a slight delay compared to growth in liabilities in the set data. Therefore, assets are expected to rise next time when the central bank will update the data for the quarter (July-September 2021) compared to their current size.

The central bank’s data suggests that the rate of growth in bank’s lending to the government (net investment) has slowed down in fiscal year 2021 compared to the preceding fiscal year 2020. On the other hand, the rate of growth in banks’ credit to the private sector (net advances) has paced up in FY21 compared to FY20.

The banks’ advances (credit to the private sector) are strongly expected to grow, going forward, as the government and the central bank have given advances targets to banks. “In case, they fail to meet the targets, they would be subjected to pay higher effective tax rate,” she said.

She said that the hike in tax rates came into effect from July 1. The government and the banks are yet to finalise as increased rate of taxes would be applied to the net profit or the income to be generated in shape of interest money.

Published in The Express Tribune, August 29th, 2021.

 

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SBP enhances investment opportunities for NRPs

Recorder Report
31 Aug 2021

KARACHI: The State Bank of Pakistan (SBP) has announced to enhance investment opportunities for Non-Resident Pakistanis (NRPs) and facilitate inflow of funds in Roshan Digital Accounts through Money Transfer Operators.

In order to provide further investment and financing opportunities to non-resident Pakistanis (NRPs), SBP has allowed direct investment through the rupee-based Roshan Digital Accounts (RDA), into the shares of companies in Pakistan and units of funds established and operated by private fund management company licensed by SECP.

Moreover, to facilitate investment in real estate in Pakistan, financing facility has been allowed to RDA holders through their PKR Account using digital channels. In addition, inflow of funds into rupee denominated RDA has been allowed through Money Transfer Operators (MTOs).

Earlier investment through rupee denominated RDA was allowed in registered government securities, listed securities on the stock exchange, mutual funds, real estate with self-financing and term deposits of the banks. The above changes will not only provide more investment opportunities to non-resident Pakistanis but also facilitate them to purchase property in Pakistan through bank financing.

Likewise, earlier the flow of funds into RDA was allowed only through banking channels. However, based on the feedback received from NRPs, inflows from abroad into RDA have been allowed through MTOs. This would provide another convenient and economical avenue for sending remittances, particularly to the NRPs who might not have a bank account abroad.

The remittances received through RDA have already crossed USD 2 billion. SBP greatly values the contribution and trust of overseas Pakistanis in this initiative and assures them that it would continue to enhance the feature-set of the RDAs, so that the accounts can seamlessly cater to their complete banking needs.

Copyright Business Recorder, 2021

 

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Today 50 years old.

HBL Karachi

 

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Banks okay Rs59bn loans under govt’s housing scheme: SBP


Shahid Iqbal
Published September 9, 2021

By the end of last month, disbursement under the scheme has reached Rs11.5bn. ─ Wikimedia Commons/File

KARACHI: Banks approved over Rs59 billion till the end of August under the government’s flagship markup subsidy scheme Mera PakistanMera Ghar.

The State Bank of Pakistan (SBP) on Wednesday said that as a result of numerous measures taken by it and support of the government, lending for the housing finance scheme had picked up momentum.

The SBP said since the launch of scheme last year, applications for a cumulative Rs154 billion had been received by the banks while financing amounting to over Rs59bn had been approved till Aug 31 this year.
Similarly, pace of disbursement that was initially slow because of a number of factors had also picked up, it added.

Applications accepted from over 8,000 branches

By the end of last month, disbursement under the scheme has reached Rs11.5bn, showing an increase of around Rs3.8bn or 49 per cent in August 2021.

“On average, to date banks have approved 38pc of amount applied and 19pc of approved amount has been disbursed,” the central bank said.

These approval and disbursement ratios have similarly risen over the past few months as banks have put in place the needed upfront investment in procedures and technology to process applications for low-cost housing.

Banks disbursed amounts in different stages of construction or purchase. Thus the pace of disbursement is contingent upon the speed of construction and completion of purchasing process.

Since the announcement of the scheme last year, the SBP has taken various enabling steps such as introducing standardised and simple application form; adopting informal income assessment model; providing relaxations in prudential regulations; establishing help desks at all its field offices; and, designing a complaint portal supported by a network of focal persons of all banks across all geographical areas.

On the instructions of the SBP, banks are accepting applications from over 8,000 dedicated branches across the country. The central bank has also allocated targets to each bank under the scheme. An e-tracking system within each bank and a dedicated joint call centre for facilitation of the applicants has also been established.

The Naya Pakistan Housing Development Authority and Pakistan Banks’ Association, a representative body of banks, are fully supporting the scheme.

The central bank expects that with the ongoing efforts by it, government and banks, bank finance for the scheme will gain further momentum in the days to come.

However, the construction industry is highly skeptical about the success of the housing scheme on a large scale as per the government’s wishes, as the cost of construction has sharply increased due to inflation and devaluation of local currency.


Published in Dawn, September 9th, 2021

 

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SBP to keep policy rate on hold for now, hike next year:

The MPC is scheduled to announce its monetary policy decision on September 20.

Erum Zaidi
September 14, 2021

The logo of State Bank of Pakistan.


KARACHI: The central bank is seen keeping its policy rate on hold next week despite the rupee hitting record lows, and is expected to start monetary tightening by the first quarter of next year, analysts said on Monday.

The State Bank of Pakistan's Monetary Policy Committee (MPC) maintained the policy rate at 7 percent in July to support the economic recovery. The MPC is scheduled to announce its monetary policy decision on September 20.

“In my view SBP would continue to hold policy rate as it needs to balance the negative impact of Covid-19 with lower interest rates,” said Samiullah Tariq, the head of research at Pak-Kuwait Investment Company.

"I think the monetary policy will be tightened after January 2022.” The pro-growth policies of the government are seen as a major consideration for the MPC to hold the policy rate this year. However, at the same time, the increasing inflationary pressures and widening the current account deficit are also mounting pressure on the MPC to hike rates sooner rather than later.
“We expect no change in interest rates. Inflation and current account situation appear manageable,” said Mustafa Mustansir, the head of research at Taurus Securities. “Visible signs of demand-side pressure are still quite weak.”

Mustansir said lower interest rates are conducive to growth and "the growth is the government’s focus at this point". In its last forward guidance, the MPC said it expects the monetary policy to remain accommodative in the near term, and any adjustments in the policy rate to be measured and gradual to achieve mildly positive real interest rates over time.

If signs emerge of demand-led pressure on inflation or of vulnerabilities in the current account, the MPC noted that it would be prudent for monetary policy to begin to normalize through a gradual reduction in the degree of accommodation, it added.

A poll conducted by brokerage Topline Research showed that most financial market participants expect a status quo in the September policy. About 65 percent of the participants are expecting no change in the policy rate in the upcoming monetary policy statement, compared with 89 percent in the previous poll, it said.

Almost 25 percent of the participants expect an increase of 25 basis points (bps) in the policy rate, while 10 percent of the participants anticipate an increase of 50 bps or above. None of the participants expect a cut in the policy rate, according to the poll.

“We expect a 25 bps increase in the policy rate in September 2021 MPS, given the recent vulnerabilities in the current account, higher-than-expected SPI [sensitive price index] readings suggesting no let down in CPI [consumer price index] inflation and the start of discussions with the IMF on resumption of the programme,” said an analyst at Topline Securities.

Another monetary policy survey conducted by Policy Research Unit (PRU), Policy Advisory Board of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) recommended a reduction in the policy rate by 50-100 bps.

The survey results showed that 84 percent of the businessmen and researchers suggest that there should be no increase in the policy rate and nearly half of them suggest a cut between 50-100 bps.

The policy brief issued on the occasion has noted with a sigh of relief that the core inflation in Pakistan – the most definitive indicator for setting up the policy rate for any central bank – has significantly subsided to 6.3 percent in August, compared with 6.9 percent in the previous month.

Mian Nasser Hyatt Maggo, President FPCCI said that the policy interest rate must not be over 6 percent and if the SBP wants to promote business activities and economic growth in the country, it should be brought down to 5 percent. He also pointed out that interest rate in the region is 3-4 percent only and we have to compete with the region.

 

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SBP allows Pakistanis to open bank accounts through digital channels

September 16, 2021

State Bank of Pakistan (SBP) has launched ‘Customers’ Digital Onboarding Framework’, which will facilitate banks and Microfinance Banks (MFBs) to conveniently and remotely open bank accounts of Pakistanis by using digital channels including websites/portal, mobile applications and digital kiosks.

The central bank, in a statement, said that with the rapid growth in adoption of electronic banking channels, especially amidst the COVID-19 pandemic, the demand from bank and customers for digital financial transactions has increased.

It further said that under this framework, the account opening process has become swift and simplified while ensuring compliance with the applicable regulatory requirements and international standards.

SBP said that this initiative would also help in achieving bank’s financial inclusion objectives by bringing the excluded segments of the society in the formal banking sector.

The categories of accounts include ‘Asaan Digital Account’; ‘Asaan Digital Remittance Account’; ‘Freelancer Digital Account’; and the ‘Digital Account.’

The first category is the easiest to open requiring very basic information and the least number of documents albeit with some limits on functionality. The last category, i.e. Digital Account is without any functional restriction but needs more information for account opening.

A customer can start with the basic account and can upgrade over time to a higher level of account type when needed.