SBP approved scheme to offer easy mobile banking and other financial services


Tariq Sultan

The traditional brick and mortar banks offer banking services only in main cities where they have branches and ATMs. The people in the smaller cities and villages don’t have access to banking. It is not financially viable for banks to open branches in smaller cities and villages. Neither is it apparently cost effective for the banks to serve low income small ticket customers through physical infrastructure, at least in far flung areas. Hence, there was a gap between the demand or need for financial services and their supply.
Policy Intervention to Increase Accessibility to Financial Services
The introduction of mobile phones in Pakistan provided a solution to this problem. Mobile banking started in 2009 after SBP issued Branchless Banking Regulations, 2008 for financial institutions to start m-banking using cellular technology. However, only the microfinance (MF) bank sowned by Cellular Mobile Operators (CMOs) offered mobile banking services to their subscribers making subscribers captive customers, who did not have the option or choice of opening the account in commercial banks such as Meezan Bank. The commercial banks could only offer online banking through internet banking and mobile apps, which could only be utilized by a small subset of population using smart phones and computers and having access to a good internet connection.
MoIT&Tissued a policy in 2008 for implementation of the any to any model. However, the CMOs couldnot connect with all the banks having the branchless banking license from SBP. To enable the any to any model and interoperability services involving multiple financial institutions at the back end and multiple networks at the other end PTA made a regulatory framework to connectthem through a Third Party Service Provider (TPSP) for settling such transactions.
What is VRG’s role in the mobile banking domain? Is VRG also going to offer mobile banking services?
The first TPSP license was issued by PTA in 2018, under the Regulations for Technical Implementation of Mobile Banking, 2016to Virtual Remittance Gateway (Pvt.) Ltd., a Pathfinder Group company, which was also given the Payment System Operator / Payment Service Provider (PSO / PSP) License from SBP in 2017 under Branchless Banking Regulations to offer settlement and clearing services to banks, making it the only company in Pakistan having both the PSO/PSO and TPSP licenses.
With these two licenses, VRG was ideally positioned to connect all four CMOs (Jazz, Telenor, Zong and Ufone) to all 14 Authorized Financial Institutions (AFIs) to whom SBP had issued Branchless Banking Licenses to enable them to offer 166.4 million cellular subscribers in Pakistan and approx. 5 million subscribers in AJK & GB to open AMA accounts, which is a SBP approved scheme, in the bank of their own choice. The 14 AFIs include Telenor MF Bank, Mobilink MF Bank, UBank, HBL, UBL, ABL, MCB, Meezan Bank, Askari Bank, Bank Alfalah, JS Bank, First MF Bank, FINCA MF Bank, and Dubai Islamic Bank.
“The interoperability framework of PTA and Aasaan Mobile Account Scheme of SBP have enabled any to any model of mobile banking whereby any cellular subscriber in Pakistan, and AJK & GB will be able to open a mobile bank account in less than a minute in the bank of their choice, and avail all available financial services including funds transfers, bill payments, loans, insurance and investment in a Govt. approved voluntary pension scheme.”
VRG is not going to offer mobile banking services itself as it does not have a banking license. Neither will it interact directly with the subscribers. It is a B2B partner of CMOs and AFIs facilitating them to enable subscribers open a mobile bank account in the bank of their choice. VRG has the central role in the provision of interoperability services on any to any model basis.
“VRG’s motto is to help the Government increase financial inclusion in Pakistan, and AJK & GB which will help improve the financial well-being of people at large and generate healthy economic activity across Pakistan.” How does the AMA account operate? The account is opened by the banks after electronic verification of CNIC from NADRA.
No documentation is required for opening a level zero account, for which the maximum limit of transactions is Rs.25,000 per day (Rs.50,000 per month).Only the CNIC No and its issuance date are needed. For increasing the limit, Level 0 account can be upgraded to Level 1 account, which has the limits of Rs.50,000 per day and Rs.200,000 per month, by getting biometric verification done at any branch of the bank or mobile banking agent.
Once opened, the AMA account operates just like any other account. One can deposit or withdraw cash in his AMA account at any branch of the bank in which he has opened the account or at any of the approx. 190,000 mobile banking agents all over Pakistan. What is the benefit of AMA account and interoperability for the people? First of all, anybody having a cell phone will be able to easily open an AMA account without any paper work or time consuming approvals involved. The most common banking services availed by the masses are bill payments and funds transfers, Both these are not only possible through AMA, the biggest benefit of AMA scheme to the people will be that the bank charges on funds transfers can come down due to competition as was witnessed in the case of mobile call rates after two new CMO licenses were given by PTA to Telenor and Warid in 2004. What are some of the Services that people can use on a daily basis?
The uptakeof AMAwill increase when the banks provide more and more financial services needed by people electronically. For example micro loans, micro pension, micro insurance (health, life, theft, robbery, unemployment etc.). Government and all businessescan offer the option of making payments through AMA in addition to other modes such as cash, internet banking, credit card etc. The Govt. can use AMA for disbursement of all welfare schemes such as BISP, Ehsaas Program, Insaaf Imdad Program, subsidized ration through Utility Stores. The Federal and provincial governments, and armed forces can disburse salaries and pension of their personnel in their AMA accounts.AMA can also give a big boost to e-commerce, and can solve the problem of cash on delivery for many businesses selling online. The salary of low income workers of millions of retail shops, household workers, labour in construction and other industries who are currently paid salary in cash, can also be disbursed in AMA accounts.
—The writer is Group Chief Executive, Pathfinder Group and Chief Operating Officer, Facility Specialist & Multi-Services (Pvt.) Ltd. (FSMS).