Mobile Banking Regulatory Framework to be Introduced Soon

Chairman Pakistan Telecommunication Authority (PTA), Muhammad Yaseen, has said that the mobile banking regulatory framework would be introduced soon to facilitate the un-traditional banking in the country.

Speaking as chief guest at the inaugural session of the third international mobile conference, “MCB Mobile Commerce 2010”, which was organized jointly by PTA and TOTAL Communications in collaboration with State Bank of Pakistan (SBP), he said PTA and SBP are jointly working to introduce a single framework for mobile banking sector in next quarter.

He pointed out that the global mobile money industry has shown a phenomenal growth in size and scope with several modes of credit transactions, which can be made through bank branches, call centers, ATMs etc. Expressing astonishment over the lowest cost of money transaction through mobile banking, he said that a single transaction through such a mode costs only $0.08.

He added that it provides convenience to the customers at a cheap transaction cost. According to World Bank, Pakistan was amongst the top 20 countries, which had received remittances of $6.1 billion in 2007, he said. Yaseen said that there is consensus that the mobile banking regulation should be introduced gradually.

He added that PTA also wants to protect consumers and retain their trust in the regulators system. Later talking to reporters, Chairman PTA said that the 668 initiative was successful as the authority received some 7,48,290 complaints.

The number of irregular SIMs was 1.4 million and 847,389 SIMs were regularized through the 668 inquiry service. PTA blocked 4,26,473 SIMs, while 1.02 million SIMs are yet to be regularized. He said that PTA plans to undertake another four phases of the 668 inquiry service to completely weed out the irregular SIMs from the cellular companies list. He added that PTA has canceled no SIMs during the process.

About the revenue growth in the telecom sector, Yaseen said that it has been 15 percent, while investment remained $1.6 million in 2008-09. He said that this sector attracted about $815 million of foreign direct investment, which is 22percent of the total FDI that the country received.

He said that during the second phase of 668 inquiry service, PTA would change the status of SIMs issued for NIC in the past with CNIC to streamline the whole data. He said that with spread of a new cable, the broadband tariff would further decline, while use of wireless broadband has increased.

Deputy Governor SBP, Yaseen Anwar, while speaking on the occasion as guest of honour, urged the commercial banks to focus on improving access to finance and promote financial inclusion without compromising on the safety of the overall banking system.

He said that as a regulator, the State Bank would always facilitate the banking sector by providing various options to smoothly conduct its operation of financial inter-mediation. He said the SBP is also considering the non bank-led and Telco-led model of branch-less banking. This would help in regulation, which extends beyond the direct supervisory role of the central bank. He said: “We may need to establish, as in some countries, a National Payments Council that will include other stakeholders to regulate this rapidly expanding business sector.”

SBP Deputy Governor said that the central bank has issued guidelines for branchless banking as part of a broader strategy to create an enabling regulatory environment with the objectives of promoting financial inclusion. Anwar said that branchless banking is a significantly cheaper alternative to conventional branch-based banking, as it allows banks to offer financial services outside traditional bank premises.

One inherent power of branchless banking is that it can be used to substantially increase the financial services outreach to the un-banked communities and in a broader perspective provides ways and means for promotion of financial inclusion in the country,” he added.

He pointed out that the transactional volume and value of e-payments during a single quarter of October- December 2009 reached 46.4 million and Rs 4.1 trillion, respectively. Anwar said that branchless banking is no exception and its associated risks should be carefully identified and addressed.

“Our guidelines address the agent related risks, wireless and technology risks, wireless network risks, user awareness risks, data & network security risks etc. We are confident our guidelines cover the ways and means to manage these risks,” he added.

He said the SBP believes in encouraging innovative products and services in the financial sector. Giving the welcome address, President MCB Bank, Atif Aslam Bajwa urged that the longstanding social needs should be addressed for paving way for branchless banking system and its growth.

He said that there should be an enabling regulatory framework. He observed that banks in Pakistan and in the developing world have failed to fulfil the social needs of the society, saying that only 15 percent people are connected to the banks in the country and one billion globally. He hoped that the mobile banking sector would grow.

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