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SBP issues framework for branchless banking

SBP issues framework for branchless banking

KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued framework for branchless banking agent acquisition and management for the banks and microfinance banks.

Under the framework, a bank’s board of directors would be responsible for providing the strategic direction and an oversight of branchless banking agent acquisition and management while senior management will institute necessary internal controls and ensure adherence to applicable laws and regulations.

Banks have been advised to develop and enforce overall central agent management policy, covering minimum agent selection criteria, agent due diligence, business experience, financial position, integrity, personal qualities, reputation, credit profile, etc.

Regulations for branchless banking allow banks to deploy agent-based banking by involving non-banking channels for distribution of basic services. The neighbourhood agents — owners of small businesses, retail stores, franchises, etc — can carry out basic banking operations for the customers on behalf of the banks.

The number of branchless banking agents has crossed 300,000 across Pakistan, creating a large grid of human ATMs or touch points for cash-in, cash-out, fund transfers, bill payments, etc. “The effective management of delivery of services via this channel is crucial for both better services to the customers and mitigation of risks arising from banks’ dependence on third parties for provisioning of banking services,” said the SBP.

The framework also requires the banks to assess and mitigate operational, liquidity, reputational, legal, money laundering, terrorist financing risks, and to ensure consumer awareness and protection including the customer education, complaint management and grievance redressed mechanism.

Published in Dawn, June 22nd, 2016

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