ISLAMABAD: The State Bank of Pakistan (SBP) has advised cellular operators to waive account opening charges for customers opening new mobile banking accounts from next year.

In a written response to a question from Senator Mian Mohammad Ateeq Sheikh, the finance ministry told the Senate in a written response that service charges for branchless banking transactions are set up by banks themselves, on the basis of quality of services.

To facilitate the uptake of branchless banking services, the State Bank has advised branchless banking operators to provide free cash-in services to customers holding mobile accounts with effect from Jan 1, 2018.

This was in response to a question on the rules under which cellular companies are allowed to provide money transfer or ‘easy paisa’ services and the regulations under which the fee is determined for provision of branchless banking services.

Under existing rules, cellular firms can’t offer financial services, finance ministry says

The finance ministry told Senate that under the existing legal and regulatory framework, cellular companies cannot offer financial services to the public.

He said according to Branchless Banking Regulations, only banks are allowed to provide branchless banking with prior approval from the State Bank.

However, cellular companies may collaborate with authorised banks to provide such services as banks’ agents.

Chief spokesperson for the State Bank, Abid Qamar, told Dawn that branchless banking providers are charging fees on cash deposits in branchless banking accounts.

In June, the State Bank advised banks in a letter not to charge any fee when customers deposit cash from January 2018.

“These charges were discouraging the public from opening and using branchless banking accounts,” Mr Qamar said.

According to cellular operators, the move would encourage more users to open mobile banking accounts free of cost.

“At the moment, 15 to 17pc of people have bank accounts while others operate on cash to cash basis and money changes hands outside the economy. But by encouraging more customers to open mobile bank accounts free of charge, the government will bring more people into its circular flow,” Mobilink spokesperson Anjum Rehman explained.

She said that by discounting charges, more customers would be encouraged to open mobile banking accounts.

“With more customers using mobile banking services to pay their utility bills etc, mobile companies will likely generate more revenue from the charges on these services,” she added.

The State Bank has authorised 12 banks – United Bank, Habib Bank, Muslim Commercial Bank, Bank Alfalah, Meezan Bank, Askari Bank, JS Bank, Dubai Islamic Bank, Mobilink Microfinance Bank, U-Microfinance Bank, Telenor Microfinance Bank and FINCA Microfinance Bank – to provide branchless banking services in Pakistan under various branch names. Two more – Silkbank and the Bank of Punjab – are on the pilot testing stage.

In response to another question on the mechanism devised for collecting taxes on loading mobile phone cards in the country, the finance minister said under federal law, income tax and federal excise duty are chargeable on the loading of mobile phone cards and their subsequent usage at the rates of 12.5pc and 17pc.

Income tax is advance adjustable tax and is applicable in all of Pakistan, where as federal excise duty is chargeable in those areas where sales tax, under provincial sales tax laws, is not chargeable.

The ministry said that for loading mobile phone cards, sales tax is chargeable at the rate of 19.5pc under provincial laws.

Senate was informed that taxes are collected at the time of loading of mobile phone cards and its subsequent usage. Advance income tax is collected at the time of loading of mobile cards and is to be deposited by mobile phone companies within seven days of collection.

Published in Dawn, August 31st, 2017