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How Asaan are the new Asaan Digi tal Accounts?
How Asaan are the new Asaan Digital Accounts?
By Ariba Shahid, Taimoor Hassan
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What comes first - a bank account or enough money to put in that bank account? This one problem seems to have confused decision makers at Pakistan’s central bank, the State Bank of Pakistan (SBP), which has almost always exhibited this tendency that we need more bank accounts than money in those accounts. Somehow, increasing only the number of bank accounts is going to help increase financial inclusion - particularly for women. But in this one instance, it does not.
On the eve of Women’s day this year, the central bank unveiled a new type of account, the Asaan Digital Account (ADA) in an elegant ceremony. The ceremony, which was held at Karachi’s Pearl Continental Hotel, was attended by leaders from the banking industry, officials from the State Bank including Governor Reza Baqir and Deputy Governor Sima Kamil. At the event, the Asaan Digital Account was dubbed as a banking account
And what will the accounts manage to do for Pakistan’s financial inclusion numbers
that would break barriers for women’s entry into the formal financial system. This is not the first time a new type of account with a focus on financial inclusion. The State Bank has in the past introduced the Asaan Account for the unbanked and the Asaan Mobile Account for the same purpose. The Asaan Digital Account is one in the series of State Bank’s initiatives to ease the process of account opening for the unbanked, especially women.
The Asaan Digital Account was launched on Women’s Day. The central bank’s press statement on the launch said that it will break barriers for women's financial inclusion. However, the Governor SBP, Reza Baqir said that the accounts are not just for women and will help boost financial inclusion across genders. The SBP spokesperson, Abid Qamar, in a comment to Profit, said that the central bank may explore the segmentation of Asaan Digital Account based on gender and other possible dimensions.
Despite the fact that the account is designed for everyone, it does not ease the process of account opening for women which is the purpose behind the name ‘asaan’ and would be less impactful for female financial inclusion. How? Let’s look at the features of the ADA and the account opening process.
The Asaan Digital Account
Avivid memory for nearly all account holders in Pakistan is making trips to the bank to set up an account, jumping through hoops to show proof of income, verify your address, etc. The easier route is obviously just walking into a branch where you know someone, or know someone that knows someone at the bank to make things easier. Five years ago, if someone told you that you can open up a full-service bank account from anywhere at any time using your smartphone you would call them crazy. You’d send them off to a mental ward if they told you that all you need is a CNIC and no other documentation.
Abid Qamar, chief spokesperson for the SBP
With the advent of digital banking, some of the banking functions can be done through a website or an app instead. The recently launched ADA can be opened through a website or a banking app which makes it “faster, cheaper, efficient, and convenient”. These accounts are different from Asaan Mobile accounts that are not full-service accounts. Instead they are bank accounts operated over feature phones.
Banks can offer current, savings or any other remunerative category of accounts. They are all card-based and the issuance of a checkbook depends on the customer and whether he or she requires or requests one. Account holders will get SMS alerts, internet banking facilities, mobile banking, etc just like regular bank accounts. Banks, however, are allowed to offer more services and facilities in order to attract more customers and stand out from competition. You cannot open a FX account using Asaan Digital Account.
Despite these being fully serviced accounts, because you do not provide extensive details about the source of income, there is a limit to what you can do. Your debit and credit transactions cannot exceed Rs 500,000 each. That means, at max you can withdraw Rs 500,000 in a month. However, you are not allowed to save or keep more than Rs 500,000 in this form of account.
What do you need?
The account opening form has been simplified so that the process does not seem daunting to consumers. You need to provide your name, father/ spouse’s name as per your CNIC, date of birth, place of birth, mother’s maiden name, CNIC number, mobile number, address, occupation, source of income, purpose of account, specimen signature, expected turnover, next of kin, etc. It is important to note that you do not need to provide proof of the source of income, just a declaration is enough.
In case someone walks into a bank to open an Asan Digital Account, they will be pleased to know that the form is a short one. In fact, as per SBP directions, “AOF should not exceed one page and the same should be available in Urdu and English.”
Moreover, contrary to what your bank manager says, you can use either of the following to set up your account: CNIC, SNIC, NICOP, Alien Registration Card, Passport, and Pension book. Minors can use photocopies of Form-B, Birth Certificates, or even student IDs in addition to ID documents of a guardian.
The banks then use your information and verify it through NADRA’s verisys. If someone goes in for their biometric, the account is opened immediately, however, if you don’t it takes at most three days for verification from NADRA.
All you need is Rs 100 as an initial deposit to open the accounts. As per the SBP, there are no minimum balance requirements on these accounts.
Moreover, a common point of contention amongst the unbanked or the lower income segments are the costs associated with financial inclusion such as banking service fees. The SBP, however, has pushed banks to keep the fees at a minimum.
The SBP guidelines state, “Banks will only charge a reasonable and market competitive fee on providing banking services to Asaan account holders; however the charges/fee should be kept at minimum level keeping in view the instructions of SBP regarding service charges and responsible pricing issued from time to time.”
Is this safe for Pakistan?
Pakistan has two unmet targets out of 34 action points as per the Financial Action Task Force (FATF). As a result, Pakistan remains on the grey list until it addresses the remaining deficiencies in its financial system. The Global watch dog keeps a strict eye on Pakistan and its financial sector. So it’s unlikely that the SBP would come up with any loophole. “The account opening process of Asaan Digital Account has been made swift and simplified while ensuring compliance with the regulatory requirements (including KYC) requirements and international standards. It may also be appreciated that the AML/ CFT requirements are risk based and they have been appropriately applied keeping in view the transaction limits applicable to Asaan Digital Accounts,” explains Abid Qamar, Chief Spokesman, State Bank of Pakistan.
Qamar adds that the accounts are a way to serve the unserved and underserved segments of society. “It is expected that it will not only result in increased convenience for the customers to fulfill their financial needs but will also help in achieving SBP’s objective of financial inclusion that will ultimately promote documentation of the economy,” Qamar adds.
During operation of the accounts, if any high risk factor is identified by the bank in its own assessment or as per international standards according to FATF Recommendations etc, the SBP allows the bank to consider taking necessary action in accordance with law including filing Suspicious Transaction Reports (STRs) with FMU.
Moreover, to ensure greater compliance, one CNIC holder can open only one Asaan account in a bank. It doesn’t matter if they open a single account or a joint account. These accounts, despite being fully serviced, cannot be used for outward cross border transactions.
The banks are also supposed to monitor the accounts to see whether they are used in accordance with the account purpose and the profile of the customer.
Why does financial inclusion for women matter?
The many readers of this magazine may not understand what it’s like to be refused a bank account or sent back asking for more information. An average reader of Profit, by virtue of literacy, can probably be considered more privileged than the rest of the population. However, the vast population of Pakistan is much bigger than that and their reality is important to take into account as well.
The SBP has a genuine worry that the overall banked female population is only 18% of women in the country. At a conference last
Dissenting note - why the ADA won’t aid in financial inclusion for women
By Taimoor Hassan
One objective view on the Asaan Digital Account is that it is nothing new. “ADA has been branded to look like it is for women when, frankly, digital accounts before this were not gender discriminative either. The problems lie not in the type of accounts but what is needed to get there,” says a top banker. The early adopters of ADA scheme include Bank Alfalah, Standard Chartered, UBL. But to spearhead the scheme, the three banking partners which have been chosen have zero rural base which likely form the bulk of the women population that are unbanked. Women in villages will not go to a Standard Chartered branch in a city to open an Asaan Digital Account. Neither would they be able to open such accounts on a smartphone or a laptop. If that was the case, EasyPaisa and JazzCash wouldn’t have branchless banking agents. They are there because people need assisted banking services. The SBP, instead, should have partnered with microfinance banks and microfinance institutions who have their actual footprint in villages. Until or unless you bring it to that level of availability and women are not incentivised, financial inclusion for women will not increase. From a woman’s point of view, what can be a woman’s source of income in a village? She will rear cattle, she will sell vegetables. Or she will sew clothes. To do that, the first thing you have to do is to give easy access to credit to that woman. If you are expecting it to be money deposited first, that is not going to happen. Our society is not structured that way. Women need to be able to earn first so they need access to credit which is abysmally low. Profit has earlier argued the same point in a cover story that financial inclusion is overrated. Having only a bank account changes nothing for someone who does not have money to put into that account.
The attraction for the female masses to come to a bank account is that they get access to credit first. Asaan Digital Account is better for publicity but practically, it does not solve any problem. It is not addressing the problem statement. The problem is that nobody handed out money to females in Pakistan to do business. Why would such a woman open an Asaan Digital Account with Standard Chartered Bank, of all the banks? All these banks, SCB, Alfalah and UBL, are considered elitist banks and not for the commoners. Banks for commoners are Habib Bank and National Bank. To spearhead this effort, this account should have been published with the National Bank that we are making it your duty now as the SBP that you have to enable women in villages for access to credit. And for rural females’ access to credit, the choice of account should be Asaan Digital Account.
The distinguishing feature so far of Asaan Account has been a higher limit of Rs5 million and basic KYC through the ID card. As far as the limit is concerned, financially excluded women earn very less than that. The limit itself shows that the account is elitist and has little concern for financial inclusion.
According to the SBP directives, opening of these accounts can happen in a digital setting, which is what ‘asaan’ means. A female, or anyone else for that matter, can open ADA using a smartphone or a laptop. How many women do you think would have smartphones? How many of the women in Pakistan would have a smartphone in villages? Or laptops? And would they be able to carry out transactions from their phone app, if they do have a smartphone? Or would they be able to withdraw money from an ATM on their own?
If you compare apples to apples, you’d find that for a woman in a village, it is more attractive to go to an EasyPaisa agent who is present in large numbers, to go there and open an account, deposit money and withdraw as well. Dialing *786# to open an EasyPaisa or JazzCash account on a phone is also much easier than opening an Asaan Digital Account via a smartphone.
Another distinguishing feature of the Asaan Digital Account, and which is rightly a concern for female financial inclusion for the masses, is that they are asked for proof of income to open an account. Documentation like this is a problem for women who are not salaried and work odd jobs for instance as a house maid, or somebody who harvests crops in a village. They can not provide proof of income. SBP considers such documentation as a barrier to financial inclusion for women and financial inclusion overall. Theoretically, if this barrier is removed, women, particularly, should be able to open more accounts.
But while the SBP has announced that no proof of income will be required for the Asaan Digital Account, Profit’s survey of partner banks that are offering these accounts show that the reality is otherwise. Pakistan’s biggest bank HBL requires proof of income for opening an Asaan Digital Account. If a female does not have her own proof of income, she needs someone else in the family to submit proof of income to open the account. A representative from HBL said that proof of income is required for all sorts of accounts that are opened at HBL, making the claim of less documentation in case of ADA fall flat. Another bank, Bank Alfalah, also requires submission of proof of income to open the Asaan Digital Account at the bank. This was ascertained by a representative of Bank Alfalah as well.
Only UBL and SCB representatives said that submitting proof of income was not necessary at their bank.
In all of this, a question arises that if the obstacles to financial inclusion for women, or for anyone else for that matter (documentation is a problem for unbanked regardless of the gender), what good can the Asaan Digital Account bring? Nothing substantial, really. All the functions are already being carried out by other types of accounts at banks. Banks could have simply been asked to make their accounts digital, which seems to be a big selling point for Asaan Digital Account. n
year with microfinance institutions, the SBP governor reportedly deplored the financial inclusion for women statistic. According to SBP estimates, only 7.0% of women in Pakistan had a bank account with a formal financial institution or mobile money service provider like JazzCash or EasyPaisa. By June this year, the SBP had asked the banks to take this percentage to 30-33%. Under it’s National Financial Inclusion Strategy (NFIS), the SBP wants to increase the number of female bank accounts to 20 million.
Only one-third of total adults in Pakistan borrow money and according to numbers from the SBP, only 2.4% of total population has access to credit. If 2.4% is the percentage of the population with access to credit, it would be further low for women. These statistics are nothing short of being horrible and a cause for alarm.
According to experts, the explanation
behind low numbers for female bank accounts is that women do not have funds to begin with to put in their accounts. For such women, there is no value of a bank account unless they have access to credit first to start a business and generate income from that to put into the bank account. The hierarchy and structure of the society, outside cities, which forms the bulk of the female population, women do not have funds to put into a bank account to begin with. Income support programmes like BISP and other exclusive female centric programmes only give women Rs1,500-2,000 per month. Such income is low for subsistence to begin with, let alone operate a bank account which has costs associated with it.
The SBP seems to have thought of, in a bid to increase the percentage from 18% to 33%, playing a role for women and launched the Asaan Digital Account Scheme.
Let’s use a more social scenario to explain this. With around half the population consisting of women yet largely being unbanked, it is important to explore why.
Why do you think women are given gold jewelry when they are married, even if they do not ever wear it? Of Course it is a custom but there is more to it than meets the eye. If we ignore the societal pressure on parents for giving dowry to their daughters for a moment, we realize that when a mother hands over a gold set to her daughter for marriage she is often found saying, “This is your security.”
Again, privileged folk may not understand, but security here is a keyword. In a world where women needed to show proof of income through a letterhead, official document, or payslip of their husband or father; and sometimes had to get two male references to open a bank account, they found themselves reliant on men. The very fact that they had money saved for themselves could no longer be kept a secret or private.
So when a woman is given jewelry, she is in procession physically. In case she ever finds herself in a financial situation or a domestic abuse situation, she can pack up her jewelry, leave her home and immediately sell it. It is the closest thing to a savings deposit in a negative real interest rate environment for a woman.
This is just one example, from countless on why financial inclusion is important. These accounts were launched on women’s day and so we used a female centric example.
“Currently, account opening data for Asaan Digital Accounts is not available in the public domain. However, SBP may consider publishing the same along with other key banking statistics, in the future. In future, while making this data available in the public domain, SBP may explore its segmentation based on the gender and other possible dimensions,” notes Qamar.
Financial inclusion lies at the heart of independence for an individual. Therefore, making it easy for someone to open up a bank account makes the next steps easier too. As per the SBP, The Asaan Account is targeted at common people and is open to all low income unbanked/under-banked masses who face difficulties in account opening due to normal account opening requirements or lesser means. These segments of society may include but are not limited to skilled/unskilled workforce, farmers, less educated/uneducated people, laborers/daily wagers, women/housewives, self employed individuals, pensioners, young adult population etc.
They can now save through these accounts, run a small business, and manage their finances better. In turn this results in greater documentation for the economy, especially for those people that want a fully functional bank account but know they won't cross Rs 500,000.
Moreover, having a bank account also makes an individual eligible for various schemes.
The Pakistan Tehreek-e-Insaf government’s housing initiatives like Naya Pakistan Housing Scheme and Mera Pakistan Mera Ghar for low-income communities. The problem at the center again has been that the demographic targeted for this facility, there are not enough data points to assess their credit worthiness. And without proper credit assessment, the rate of default would be high.
Since these accounts are meant to be for the unbanked, transactional data on the accounts would provide data points for assessing credit and possibly make the housing dream a reality for low-income people.
Once billions of rupees worth of cash is digitized, banks’ deposits will also increase and then a better case could be made to push banks to offer better consumer products and services for low-income demographics. Banks would then tailor products, the willingness of banks would also be high and the low-income groups would be made to feel privileged by the very banks that once ignored them. n
