Aug 25 - 31, 2008

The e-Banking in Pakistan has recorded phenomenal growth over the years. According to the latest data available, there were 6.4 million cards in circulation of which 24% are credit cards while the rest or 76% are debit cards. Similarly, more than 3200 ATMs and 54000 Point of Sale (POS) terminals have been working seamlessly across Pakistan, thus providing 24/7/365 banking facility to plastic money holders in Pakistan. Such a huge infrastructure supporting card based transactions indicates huge potential for the growth in e-Banking business in Pakistan .

The State Bank of Pakistan has taken several measures to enhance security of plastic money transactions in the country with a view to effectively address customer complaints and to ensure continued growth in the fields of e-banking and e-commerce.

It may be pointed out that the misuse of debit/credit cards has opened new chapters of fraud and forgery. In most of these cases, the misuse of cardholders' personal information has occupied a prominent place. Previously, Point of Sale (POS) terminals used to generate transaction slips visibly indicating the cardholder personal information such as name of the cardholder, 16-digit Card Number, date of expiry, etc., which can easily be used for fraudulent purposes. In order to effectively address this issue, the Payment Systems Department of the State Bank of Pakistan in collaboration with commercial banks initiated Primary Account Number (PAN) masking project. Under the project, all the POS terminals have been reconfigured so that they should print only the encrypted transaction slips.

This exercise has been successfully completed and more than 54000 POS terminals placed at various merchant locations (such as petrol pumps, shopping centres etc) across the country were reconfigured for PAN masking. This security feature would definitely enhance the confidence of consumers in Pakistan which eventually help in promoting e-Banking culture in the country. Plastic money users now comfortably can use their Debit/Credit/Smart cards anywhere in Pakistan irrespective of the amount of transaction without fear of disclosing their personal information on transaction slips.

This project was undertaken against the backdrop of rapid development in information and telecommunication technologies coupled with low-cost technology delivery that is enabling new payment systems models which were not possible a decade ago. The financial institutions around the world are rapidly introducing new and innovative e-Banking products and services for their customers. Commercial Banks in Pakistan have also developed various e-Banking products to provide an efficient and effective payment facility to their customers. The State Bank plays a crucial role in proactively promoting a safe and secure e-Banking culture in the country.


The Central Bank in order to protect the consumers in the banking sector has issued directives to the commercial banks to adopt fair practices and to make complete disclosure of the lending and deposit rates of all consumer products offered by them and to clarify the pricing structure of the loan in the their respective loan agreements with their customers.

It may be pointed out that the existing instructions of the State Bank require banks to get the schedule of charges printed and make the same available to their customers at all branches at least seven days before the commencement of the half year. The banks are also required to make available their schedule of charges on their websites. Similarly, locker-holder issue has also been taken care of by prescribing the insurance ceiling as per the size of the locker. Only recently, the SBP advised all banks to pay a minimum of 5% profit to all depositors regardless of their account balances.

These instructions and other measures taken by the State Bank from time to time are manifestation of SBP's resolve to protect the interest of banks' customers. The State Bank has also taken a number of steps to ensure that consumers have access to accurate information, fair credit billing and reporting, fair debt collection practices etc. Most of these issues will be further addressed as SBP is processing "Consumer Protection Act" and issuance of "Fair Debt Collection Guidelines" in the near future; former would need to be considered by the Government / legislature.

Complaints by certain quarters that banks charge very high mark-up rates on credit cards products need to be seen in the proper context. Credit Cards are not a debt instrument and the banks allow Credit facility free of mark-up/interest to their Card holders for the period around 30 to 45 days or as specified in their terms and conditions accepted by card holders. The card holders may make purchases and can make payments within the stipulated period without any financial charges. One of the features of Credit Card is withdrawal of cash. Any liberty available to the card holder to pay the amount in to without any mark-up or extra charges is not meant for cash withdrawals. Further, the high mark-up rate on credit cards can be attributed to high cost associated with their marketing, recovery, administration and fund utilization. The same scenario exists internationally.


In addition to establishment of the Office of the Banking Mohtasib, the SBP has established a full-fledged Consumer Protection Department to effectively resolve consumer's complaints against banks. The State Bank has already addressed the issue of early disposal of the complaints by directing the banks/DFIs to provide redressal within a period of 10 working days. However, in any case, the final reply may be sent within a period not exceeding 45 working days, barring cases where reasonable grounds exist on record for not complying within the prescribed time period.