SBP Directs Banks To Take Action Against Branchless Banking Agents for Overcharging

State Bank of Pakistan (SBP), through a new policy framework, has directed commercial banks and microfinance banks to take prompt action against their agents for overcharging customers in the name of service fee.

The action will include termination of agents’ contract besides their name will be included in the centrally maintained blacklist to make sure that same agent isn’t employed again by any other bank as a partner agent.

The overcharging of fees by branchless banking is one of the wrongdoings which have been observed largely at different agents’ shops who openly demand extra Rs 10 to 20 for processing utility bills (electricity, gas and water).

However, there are different malpractices by branchless banking agents which will be checked by banks and microfinance banks time to time to stop and penalize them.

SBP’s framework identified following issed to be checked by banks and financial institutes:

  • Involvement in frauds and forgeries.
  • Misreporting to banks.
  • Large number of customer complaints.
  • Serious non-compliance issues as identified by compliance, internal audit or SBP inspection.
  • Involvement in illegal banking activities.
  • Unauthorized agency transfer.
  • Transactions with banned/ proscribed persons/entities.
  • Account opening or fund transfer transactions on the basis of fake or incorrect information/document.
  • Frequent denial of service by agent to the customers.
  • Others- to be specified and deemed appropriate by banks and microfinance banks.

Frequent service denial is also observed by those retail agents having less availability of cash to meet fund requirements of a receiver from a sender of money.

Further, it has become common that branchless banking agents provide fund transfer services to customers against CNIC copy of others, which is also violation under this new framework.

The central bank spelled out these checks and balances in the Framework for Branchless Banking Agent Acquisition and Management (Framework) recently issued in addition to BB Regulations to supplement the entire branchless banking regulatory environment.

Broadly, the Framework aims to facilitate the implementation of agent banking, in a robust, reliable, safe and sustainable manner whilst safeguarding consumer interests and confidentiality. The Framework operates on the premise that banks retain the ultimate responsibility and accountability of all agent-based BB activities and protection of BB customers

There are nine branchless banking services operating in the country. All of them are being functioned on bank-led model hence the State Bank of Pakistan (SBP) is supervising their operations.

Out of nine, seven service providers collaborated with telecom companies including Easypaisa, Upaisa, Mobilepaisa, Jazzcash, MeezanUpaisa, Timepey. Two of the banks—HBL and UBL are running their branchless banking in collaboration with different telecom operators.

So far, there are 301,823 agents throughout the country. Among them 232,637 agents are declared as active by State Bank of Pakistan.