July 17, 2021 (MLN): With a sudden outbreak of COVID-19 followed up by a prolonged lockdown during 2020, digital banking with regards to online banking services including payments took a major turn where individuals were left with no alternate except for moving towards digitalization to carry on their lives.
Pertaining to that, the State Bank of Pakistan (SBP) took key initiatives on digital banking for customer satisfaction and a user-friendly system.
To discuss the future vision and initiatives taken in past, the State Bank of Pakistan (SBP) organized a special meeting on 16th June 2021 with analysts. The objective of this meeting was to apprise them of the latest developments in digital banking.
A prominent angle discussed in the session revolved around the protection of lower-income groups, regarding which the Deputy Governor SBP stated,
“We want proper financial inclusion where people should have active banking account and usage, especially ones settled in rural hubs”
Further, a salient step taken by the bank was brought in the conversation which was people who will have transactions under Rs25000 will not be charged any cost, keeping them free. The cap will be over Rs25000 transactions, where the money would be charged.
Regarding Inter-Bank Funds Transfer (IBFT), SBP is working on some changes as per the session, as during COVID-19, IBFT was made free for the individuals that actually doubled the over transactions. These changes will be applicable after July 1st, 2021, Governor stated.
A major step taken by the SBP in terms of the development of digital finance services was the introduction of Raast, Governor apprised that Raast instant payment system is an internationally recognized method of payment that will enter into phase 2, where important steps are being taken to make it more useful for the people.
The other initiatives discussed in the meeting included,
- Person to Person (P2P) transfer initiative which allows individuals to send money to anyone just by using their email or cell number. This system will be brought in by the end of October.
- Merchant Payments, which revolves around one of the challenges faced in the digitization of retail transactions in Pakistan regarding a low number of digital payment acceptance points.
- Fintech and EMIs are also in progress where work is being done in Fintech and licensing for EMIs is also in progress.
Subsequently, towards the aspect of security regarding digital payment frauds, SBP worked with 1Link and FIA, kept units and limits on transactions, and for card security, SBP directed that EMB standard has been applied.
Furthermore, regarding Central Bank Digital Currency (CBDC), Governor said a study which is ongoing regarding all aspects of CBDC including retails CBDC and if there would be a need to introduce it, then steps would be taken considering the future of digitalization in Banks of Pakistan, he added.
With this, it is early to culminate whether the future of digital finance services would be as bright as it looks, but sooner this puzzle would be solved as time will pass on and actions will portray what is to happen.
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