State Bank of Pakistan (SBP) has allowed conventional banks to establish a separate setup of online funds transfer mechanism for the operations of Real Time Gross Settlement System (RTGS). This system will be exclusive of their interest-based banking operations.
Commercial banks with Islamic Banking Divisions will have direct membership of (PRISM) System for Islamic Banking Branches (IBBs) which will be conveniently helpful for bankers to carry out treasury and funds dealing separately with the central bank.
The access of Islamic Banking Branches to the PRISM system will improve the efficiency of the financial services offered under Banking System. It will also enhance the outreach of electronic transfer of large value funds.
This step is seen as a good omen by the experts who believe that it will help maintain transparency in the system by the central bank. According to them, it should be mandatory for banks to have separate dealings for all funds transactions and treasury operations with central bank, and with the Islamic Banking Industry.
Experts urge that the central bank must make it mandatory for conventional banks with Islamic Banking Divisions to ensure a separate system at any cost within the industry and PRISM system.
The central bank further directed conventional banks to establish separate Central Processing Unit (CPU) for their Islamic Banking Branches (IBBs). These IBBs shall arrange necessary equipment /Hardware for RTGS Installation.
IBBs shall set up RTGS Technical Team for setting up IT infrastructure, connectivity issues, Network line, PTCL landlines etc. IBBs shall also setup separate Disaster Recovery Site and Business Continuity Planning (BCP) along with its Primary site.
They would be required to establish Funding Arrangements (FA) / Credit Lines (CL) through Islamic modes in compliance with relevant SBP rules and regulations with Direct Participants of PRISM. This will enable Direct Participants to replenish Islamic Branch Settlement Account as and when required within the stipulated time.
IBBs shall comply with all PRISM Operating Rules, Other Laws / Rules applicable and issued from time to time in letter and spirit along with fulfillment of membership requirements and criteria.
There are 860 branches and 140 sub-branches of Conventional Banks for Islamic banking operations and services throughout the country. Some 16 banks are operating Islamic banking services including Standard Chartered Bank as Sadiq, UBL as Ameen, National Bank of Pakistan as Aiteemad, Soneri Bank as Mustaqeem, Silk Bank as Emaan, Faysal Bank as Barkat and etc.
Earlier in January 2016, SBP directed all commercial banks to ensure online transfer of large value payments in an efficient and prompt manner. Banks have been advised to create awareness among the general public through print media etc, about the usage of this facility.