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By Taimoor Hassan
ffective July 1 this year, the State Bank of Pakistan (SBP) has decided to continue fee waivers on inter-bank fund transfers on transactions up to Rs25,000 limit, in a bid to keep digital transactions inexpensive for the low-income demographic of the country which will help promote financial inclusion. But while the SBP’s push is noble, the captains of financial inclusion, branchless banking players JazzCash and EasyPaisa that have helped bank the low-income segments of the population, are unhappy as IBFTs form a major source of revenue for these players. Consequently, this might affect the goal of financial inclusion if these companies see a decrease in financial viability. In a recent circular, the central bank has instructed that commercial banks, microfinance banks (MFBs), and electronic money institutions (EMIs) shall continue to provide free of cost IBFT services to their individual customers up to, at least, a minimum aggregate sending limit of Rs25,000 per month per account or wallet. Individual customers of banks, MFBs, and EMIs shall continue to send out as many free IBFT transactions as long as they remain within their monthly limit of Rs25,000. However, financial institutions have been allowed to charge 0.1 per cent of the transaction amount as IBFT fee for transactions beyond the Rs25,000 limit, which the SBP deputy governor said will help banks recover any costs associated with providing these services. The central bank has further capped the IBFT charges at Rs200. Sima Kamil, deputy governor at SBP, said that limiting charges
BANKING
on IBFT transactions is primarily aimed at protecting the lower-income groups in the country, and it is the low-income segment for whom IBFTs would in actuality be free of cost. “According to our estimates and the data that we have analysed, the majority of the customers that carry out IBFTs will be protected and their transactions will remain free,” she said. While the banks have been allowed the discretion to choose to charge 0.1 per cent of the transaction amount or Rs200, the SBP has instructed the banks to charge whichever is the lowest amount, encouraging them to further slash the charges at their discretion to promote the adoption of digital payments in the country. The initial waiver that was effected at the onset of the pandemic in March last year removed IBFT charges for all transactions regardless of the transaction amount or limit.
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