Pakistani Banks Don’t Care About Customers Because They Don’t Need to

Pakistanis have a love-hate relationship with local banks, and banks themselves don’t care much to properly assist customers (non-government) as they should.

At the end of the day, it is the regular man who invariably suffers the most. Banks were one of the most profitable entities in Pakistan even during the COVID-19 lockdowns because of the government support they receive and the unfair policies they have toward the customers, monetizing every little service which is usually offered for free in the rest of the world. With record-breaking profits even during a financial crunch, most banks really don’t care what the customers want and the rest of the article just gives a brief overview of what’s happening in Pakistan’s banking sector.

Bank-wise Breakdown of Complaints in 2020-21

The table below highlights the complaints received against banks during 2020, as published by the Banking Ombudsman in its annual report:

Bank	Complaints Received through BMP Secretariat	Complaints on PM Portal	Total
Habib Bank Limited	2,654	2,663	5,317
United Bank Limited	1,562	1,536	3,098
Institutions other than banks	391	2,398	2,789
MCB Bank Limited	863	1,007	1,870
Allied Bank Limited	530	1,009	1,539
Bank Alfalah Limited	638	629	1,267
National Bank of Pakistan	630	191	821
Faysal Bank Limited	515	287	802
Meezan Bank Limited	376	383	759
The Bank of Punjab	260	499	759
JS Bank Limited	431	234	665
Silk Bank Limited	399	248	647
Standard Chartered Bank (Pakistan) Limited	366	182	548
Askari Bank	209	204	413
Bank Al Habib Limited	254	134	388
Bank Islami Pakistan Limited	102	88	190
Soneri Bank Limited	99	65	164
Dubai Islamic Bank Pakistan Limited	95	67	162
Zarai Taraqiati Bank Limited	106	14	120
Habib Metropolitan Bank Limited	71	34	105
The Bank of Khyber	22	63	85
Summit Bank Limited	38	27	65
Albaraka Bank (Pakistan) Limited	35	24	59
Sindh Bank	20	28	48
The Punjab Provincial Cooperative Bank Limited	17	20	37
Samba Bank Limited	10	11	21
First Women Bank Limited	8	0	8
SME Bank Limited	2	1	3
The Bank of Tokyo — Mitsubishi UFG Ltd	1	0	1
Total	10,704	12,046	22,750

Complaints Statistics for Q1 2021-22

During an investigation of complaints, the Banking Mohtasib (Ombudsman) noticed systemic deficiencies and related weaknesses among banks. The reported issues were forwarded to the State Bank of Pakistan (SBP) for action. In short, the banks had taken little notice of the common customer’s plight and had failed to approach the issues as was expected of them.

Irrational Deduction of Withholding Tax

In one of many similar occurrences, complainants indicated that they had a business account with the concerned bank branch and that they are tax filers with no tax issues. However, a system error or ignorance of the bank staff had caused the concerned branch to deduct withholding tax (WHT) of Rs. 221,495.40 on all the fund transfer transactions made from 23 September 2019 to 8 November 2019.

The complainants protested this misconduct by the branch staff and asked for a refund of the entire amount of Rs. 221,495.40 that had been deducted as WHT. The bank had then refunded an amount of Rs. 117,993.00 only and was hesitant to refund the remaining amount of Rs. 103,501.47.

As the matter remained unresolved, the affectees lodged a complaint with the office of Banking Mohtasib Pakistan. Upon the receipt of the complaint, the matter was taken upon the merits of malpractice.

Insurance Policy Issued Without Consent

In another instance, a complainant stated that he had been maintaining his Profit & Loss Sharing (PLS) account at the branch of a bank and had been working in Dubai since 2008. In his absence, the then-branch manager had connived with an insurance company to get a life insurance policy amounting to Rs. 1,307,500 issued in the customer’s name without the latter’s knowledge and consent.

When the complainant returned to Pakistan in 2017, he learned of the problem and filed a complaint at the Office of Banking Mohtasib Pakistan after the bank failed to address the issue.

Refund of Unclaimed Deposit

In another example, a complainant alleged that he had an account with a Pakistani branch of a bank but had been unable to use it for a long time because he was in England. A sum of Rs. 1,393,916.55 had been transferred to the State Bank of Pakistan in an unclaimed account in 2015 while he was away. When the complainant returned to Pakistan in 2016 and realized the matter, he filed a complaint with the Office of Banking Mohtasib Pakistan (BMP) after the bank in question failed to address the issue.

Bank Fraud

Similarly in another case, a complainant stated that he had visited the branch of a bank on 27 March 2017 to partially repay his loan and markup against which the Agricultural Field Officer (AFO) had given him deposit slips for Rs. 51,500, Rs. 524,000, and Rs. 40,000. He had submitted the full amount to the AFO to deposit it into his loan account, and the AFO had then passed the amount on to another bank employee.

However, on 1 August 2017, the complainant received a notice from the bank that the sum of Rs. 524,000 that he had requested had not been put into his account. The complainant went to the BMP office to get his issue resolved. The BMP office examination indicated that the complainant’s deposits of Rs. 40,000 and Rs. 51,500 on 27 March 2017 had been credited to his markup and current accounts but it refused to account for a loan payment of Rs. 524,000 for which the complainant had a valid deposit slip.

The bank also denied the customer’s claim on the basis that his deposit slip for Rs. 524,000 lacked the branch’s official stamp, which rendered it ‘invalid’. The bank’s position in this regard is untenable because the manager was allowed to conduct banking activity on behalf of the bank.

Fraud through ATM

A complainant approached a Banking Mohtasib office, stating that she had tried to conduct an ATM transaction at Bank ‘A’ (Acquirer of funds) on 9 November 2019 but her card had gotten stuck in the ATM. Meanwhile, a person had entered the ATM vestibule and she had refrained from entering her pin code in his presence. She had approached Bank ‘A’ and the staff had said that her card would be delivered to her parent bank’s branch.

Later on, the complainant discovered that an unauthorized sum of Rs. 250,000 had been removed from her account after a few days. Even after she complained about it to the bank, the problem remained unsolved. Bank ‘B’ (Issuer Bank) reported that the complainant had verified that she had not blocked her card after it was reportedly recorded at the bank’s ATM in response to an inquiry from Banking Mohtasib’s office. Her private ATM PIN code had also been acquired via shoulder surfing by the suspected perpetrator.

Fraudulent Transaction through ATM

This case of fraud was largely overlooked by a bank that will remain undisclosed. The complainant stated that she had an account at a bank branch in Gujrat. She had received a call on her cell phone from the bank’s official number on 4 February 2019, inquiring about her account information and ATM card pin code, which she had provided. She then discovered that an unauthorized amount of Rs. 78,000 had been transferred from her account to another account.

She had complained to the bank about it multiple times but to no avail. She then filed a complaint with the Banking Mohtasib office, after which her complaint was taken up by the bank as soon as it was received.

No Profit on Fixed Investment

The complainant stated that he was solicited by a bank to invest Rs. 1,400,000 in Fund Managers for a period of two years, with the assurance, that he would receive the invested amount with a substantial profit at the end of the period. However, he had received only Rs 1,113,615 at the end of the period in 2019, and the bank made no profit on it.

He had filed a complaint with the bank in question but it was an unsuccessful attempt. As a result, he complained about the matter to the Banking Mohtasib office.

Filer Treated as ‘Non-Filer’

The affectee in this instance had complained that he had a current account in his company’s name with a bank and that he was also a filer with a registered taxpayer status, which was evident from his appearance on the FBR’s Active Taxpayer List (ATL). On 23 January 2019, Rs. 600 was debited from the company’s account by the bank’s branch for considering the complainant as a ‘Non-Filer’, which he had objected to.

After carrying out certain procedural formalities, the branch confirmed that from then onward, no WHT on cash withdrawals would be recovered as the account status was that of a Filer, but to the complainant’s surprise, the bank continued recovering WHT, and he was asked to furnish some more documents each time, which he did but to no avail.

Upon the reconciliation of his account, the complainant had found that the branch has recovered around Rs. 293,000 from the account since January 2019 for a tax deduction. When this issue was raised, the branch verbally advised the complainant to file an income tax refund application with the Federal Board of Revenue (FBR), which he considered to be unjust because the branch had recovered the WHT illegally from his account and had not rectified its mistake despite being notified in January 2019.

Note: The aforementioned complaints were resolved after the swift interventions of the Banking Ombudsman (Mohtasib) Pakistan.

‘Credit’ Services

Banks have been singularly unsuccessful in driving the customer journey, being long on capital but short on innovation. Throughout the world, banks usually focus on selling their products/instruments such as credit cards to potential/existing customers without any delays. In Pakistan, the story is actually quite the opposite.

The affectee in this instance had approached the United Bank Limited (UBL) in July via the bank’s customer care helpline to apply for a credit card. Despite countless tries, this individual was constantly asked to wait. Later, the affectee tried the UBL website to apply for the credit card online, even then the Bank didn’t get in touch for facilitation.

Thereafter, the concerned citizen visited a UBL branch to inquire about the status of his credit card face-to-face. After brief due diligence, the affectee was asked by the bank for documents required for approving the credit vehicle, which he provided. A month later, the Bank asked the applicant to re-submit the documents, giving a sense of false hope at the same time that the credit will be issued next month. This happened thrice, and in the end, the bank issued the applicant’s credit card (without asking for his preferred card option) and with a credit limit that was 66 percent lower than what was promised by the bank’s helpline and branch officials.

Unresolved Issue: App & IT Infrastructure

As far as technological integrations in terms of consolidating credit card payments are concerned, most banking applications in Pakistan do not support credit cards. Moreover, bank apps are highly susceptible to cyberattacks, and the recent NBP hack is a prime example.

In end-October, The National Bank of Pakistan (NBP) was hit by two large hacks, damaging its backend systems and servers responsible for communication between branches, as well as the systems that run its ATM network and online banking apps which made debits and cash withdrawals impossible for a few days.

Banks like HBL proclaim to be technology companies with banking licenses and have repeatedly claimed to employ advanced technological tools in their operations and customers services, even though they have miserably failed. All of the major banks regularly suffer outages in digital banking services even though the world has already moved on to next-gen banking technologies. Given the circumstances, what could a customer even do at this point?

From an overall standpoint, many banks interrupted digital banking services during the last two years, which inconvenienced customers. These issues emerged because of the significantly increased use of the internet and mobile banking by their customers as well as the volume of transactions. Ergo, they need to upgrade their services and improve users’ experiences consistently.

Summary: Why Banks Don’t Care

• Banks want you to fill up forms, and simultaneously ask you to repeat whatever you filled electronically via phone, including the spellings of every name and every bit of information for verification purposes (which appears to be flawed in its own way).
• Bankers want to get more customers on board but they treat customers badly and think customers are the ones who ultimately need the bank.
• Banks say they want to improve their customer experience but are laden with regulations and internal politics.
• Bank management thinks the customers are all old and only use tellers and branches to transact. Where are the younger generations positioned?
• Banks make you think twice about even changing certain information, even if you have duly verified that you are a rightful owner of the account and money inside it.
• Banks consider people who have less money as less important.

The list is endless, and the fact remains that this is how banks usually operate in Pakistan. Essentially, any bank’s most important customer is the government itself. Both the parties work happily together, making money off instruments such as investment bonds, treasury bills, and commodity financing, and exploit the benefits amongst themselves for the most part.