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  • SBP withdraws NADRA Verisys for activation of dormant bank accounts

    SBP withdraws NADRA Verisys for activation of dormant bank accounts

    KARACHI: State Bank of Pakistan (SBP) has abolished NADRA verisys for activation of dormant bank accounts.

    The central bank on Monday issued a circular to amend “ANTI-MONEY LAUNDERING, COMBATING THE FINANCING OF TERRORISM & COUNTERING PROLIFERATION FINANCING (AML/ CFT/ CPF) REGULATIONS FOR STATE BANK OF PAKISTAN’S REGULATED ENTITIES (SBP-REs).”

    READ MORE: Pakistan rebuts reports of stopping payments to Google

    The FBR said that the amendments have been made in order to provide further clarity regarding dormancy requirements and to simplify the dormant account activation process.

    As per amended provisions, banks and other SBP regulated entities may activate the dormant account upon receipt of a formal request from the customer through any authenticated medium, including their mobile banking applications, internet banking portals, ATMs, call centers, surface mail, email, registered mobile or landline number, etc.

    Previously, the regulated entities were required to use the NADRA Verisys and a formal request (through postal address or email address or registered mobile number or landline number) for activation of dormant account by customers. “They should retain the NADRA Verisys for record keeping requirements (digitally or hard copy).”

    READ MORE: Pakistan repays $1.8 billion in November 2022: SBP

    NADRA Verisys is verification services of National Database Registration Authority and it facilitates verify NADRA’s issued identity document (CNIC, NICOP, POC, CRC and FRC).

    As per new amendments, the banks shall send prior notice to the account holder through any registered medium, e.g. SMS, email, etc. before marking the account as dormant. Notices shall be sent one (1) month, seven (7) days and one (1) day prior to marking the account as dormant.

    “Notice shall also include the account activation procedures/ channels,” according to the SBP.

    SBP REs may allow credit entries in dormant or inoperative accounts.

    Debit transactions/ withdrawals shall not be allowed until the account is activated.

    READ MORE: State Bank stuns market with massive policy rate hike

    However, transactions e.g. debits under the recovery of loans and markup etc., any permissible bank charges, government duties or levies and instruction issued under any law or from the court will not be subject to debit or withdrawal restriction.

    The SBP also revised definition of “Dormant or In-Operative Account”. According to prior amendment it was the account in which no transaction has taken place during the preceding one year.

    READ MORE: SBP raises benchmark interest rate by 100 basis points to 16pc

    The amended definition is: “Dormant or In-Operative Account” means the account in which no customer initiated transaction (debit or credit) or activity (e.g. login through digital channels) has taken place during the preceding one year.

  • Total bank accounts in Pakistan grow to 66.13 million

    Total bank accounts in Pakistan grow to 66.13 million

    KARACHI: The number of bank accounts in Pakistan increased to 66.13 million by end of March 2022, showing a jump of 6.66 per cent when compared with 62 million bank accounts by end of same month last year, according to data released by the State Bank of Pakistan (SBP).

    It is interesting to note that the statistics showed the population grew much faster than increase in bank accounts. The SBP showed estimated population of the country at 227 million by end of March 2022 as compared with 212 million in the same period of the last year, showing a growth of 7.07 per cent.

    READ MORE: Internet banking posts 20% growth in 3Q: State Bank

    During past one year the number of total banks in the country is same at 44. However, the number of bank branches grew to 16,788 by end of March 2022 as compared with 16,223 by end of same month last year.

    The SBP presented following key highlights of Payment System Review for quarter ended March 30, 2022.

    One EMI, M/s China Mobile Pakistan Electronic Commerce Company (CMPECC), was granted commercial license in Q3-FY22.

    Number of POS machines reached to 96,975 while the number of payment cards declined slightly to 47.2 million from 48.7 million from the last quarter.

    READ MORE: SBP renews status of credit rating agencies

    E-banking volume and value grew by 2.6 per cent and 6.5 per cent respectively on Quarter-on-Quarter (QoQ) basis.

    The number of internet banking users reached 7.6 million recording QoQ growth of 10.6 per cent. These users conducted 38.3 million transactions amounting to PKR 2,906.9 billion amounting to a quarterly growth of 13.5 per cent by volume and 19.9 per cent by value.

    During the same quarter, 38.3 million POS transactions amounting to PKR 189.7 billion were conducted showing quarterly growth of 21.9 per cent by volume and 6.5 per cent by value.

    A total of 9.1 million e-commerce transactions amounting to PKR 27.0 billion were conducted digitally showing quarterly growth in value by 1.3 per cent though volume decline by -32.7 per cent.

    READ MORE: High tax may erode banks’ earnings up to 20%

    Number of ATMs increased by 1.1 per cent as compared to previous quarter. Value of ATM transactions amounted to PKR 2,437.0 billion of which 90.5 per cent transactions were related to cash withdrawals and 5.1 per cent related to Inter Bank Funds Transfer (IBFT).

    The number of mobile banking users declined by -1.0 per cent reaching to 12.0 million. Over 101.5 million transactions valuing around PKR 3,085.8 billion were conducted via mobile banking channels during the quarter, showing a growth of 8.1 per cent by volume and 5.4 per cent by value.

    Branch network of Banks and MFBs has reached to 16,788 branches, which includes 16,643 Real-Time Online Branches (RTOB), 48 manual branches and 97 overseas branches.

    Value of total RTGS (PRISM) transactions during the quarter amounted PKR 155.7 trillion of which PKR 106.2 trillion were related to Government Securities.

    READ MORE: Pakistan slaps 45% corporate tax on banks

  • Tax officials barred from direct freezing bank accounts

    Tax officials barred from direct freezing bank accounts

    KARACHI: The Sindh government has barred the officials of provincial tax authorities from freezing bank accounts for making tax recovery without approval.

    The Sindh government issued a standing order dated February 10, 2022 regarding recovery of tax due through bank attachment under section 66 of the Sindh Sales Tax on Services Act, 2011.

    READ MORE: SRB implements verification system for utility invoices

    The standing order stated that to regulate the recovery of tax due in terms of proviso to Section 66(1) of the Act read with the Sindh High Court dated January 31, 2020, in CP No. D-1882 of 2017 and others, various instructions were issued vide standing order No. 01/2020 vide No. SRB/TP/13/2020 dated July 30, 2020.

    READ MORE: KTBA identifies anomaly in SRB’s appellate system

    In order to further regulate the recovery through bank attachment of any registered person under Section 66(1), it is decided that the attachment of any bank account of the registered person in future be made with prior approval of the respective Senior Member/Member (Operations), who will grant approval of the respective relevant facts (verified and recommended after due diligence) by the commissioner and submitted through dedicated recovery note sheet, for justification thereof.

    READ MORE: SRB extends last date for payment, filing return

    “Any departure from or non-compliance with the directions in the standing order shall be viewed seriously,” the provincial government warned the officials of Sindh Revenue Board (SRB).

    READ MORE: Dr. Wasif Memon appointed as SRB chairman

  • FPCCI criticizes restoring bank account freezing powers

    FPCCI criticizes restoring bank account freezing powers

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday expressed serious reservations over restoration of powers to officers of Inland Revenue (IR) in freezing bank accounts without approval.

    FPCCI President Mian Nasser Hyatt Maggo recorded his strong reservations on the attachment of bank account under section 140 of the income tax ordinance, 2001 and section 48 of the sales tax act, 1990 and term new amendment as a hurdles to ease of doing business as envisioned by Prime Minister of Pakistan.

    He stated that on the instructions of the Prime Minister the government machinery made an atmosphere among the taxpayers that unless the taxpayers are at ease to do their business without any fear of the tax officials, it is not possible to boost the collection of revenue.

    However, it seems that the said atmosphere is again at its disturbance in the light of the Board’s letter dated 11-10-2021 wherein attachment of bank account is ordered to be made without informing tax the payers and implementation is ordered retrospectively on all recoveries.

    President FPCCI said that the trade is facing a blow due to escalation of parity between the dollar and rupee and now comes the draconian steps being taken by the Board in the shape of instructions to forcefully recover the disputed taxes from the bank accounts of taxpayers.

    Maggo further added that this is totally against the recent instructions to bar the tax machinery from taking money without prior intimation to the account holders and the fresh instructions would be a dent on the Finance Minister’s pro taxpayer posture. It is also not out of place to mention that the former Chairman FBR also against such steps of the Board to collect taxes forcefully and taken practical steps to stop such practices.

    He also said that the tax machinery is almost at a failure to dig out new taxpayers instead it is bent upon on hand twisting methods against the existing taxpayers to collect so called revenue.

    On the other hand if such practices are enforced it will pile up the litigation between the tax collectors and taxpayers and the courts are already at a burden due to such litigation.

    The trade community feels that the hierarchy of the FBR is under pressure to meet their targets and to recover the disputed taxes by using their extra ordinary powers.         

    In recent months, the taxpayers have been complaining about the “highhandedness” by the FBR. The matter had also landed in the Senate Standing Committee on Finance that last week recommended the government to sack taxmen who made exaggerated tax demands and then rejected appeals of taxpayers under pressure from FBR headquarter.

    Maggo registered a strong complaint on behalf of the Business Community against the orders passed by the FBR and urged to review its policy and collect the taxes under the trade friendly atmosphere.

    FPCCI expresses annoyance over gas suspension
  • SBP enables account opening through digital channels

    SBP enables account opening through digital channels

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday said with the rapid growth in adoption of electronic banking channels, especially amidst the COVID-19 pandemic, the demand from bank and customers for digital financial transactions have increased manifold.

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  • Finance Act, 2021: Taxpayers given three months to update business bank accounts

    Finance Act, 2021: Taxpayers given three months to update business bank accounts

    ISLAMABAD: Declaring business bank accounts has become mandatory from July 01, 2021 otherwise a monetary penalty would be imposed. However, taxpayers have been given to update their registration profile along with business bank accounts up to September 30, 2021.

    According to the Finance Act, 2021 a new definition has been included in the Income Tax Ordinance, 2001 in which business bank account means a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181.

    A Section 114A has been inserted through the Finance Act, 2021 under which every taxpayer will require to declare to the Commissioner the bank account utilized by the taxpayer for business transactions.

    Business bank account shall be declared through original or modified registration form prescribed under section 181.

    The Finance Act 2021 further imposed monetary penalty for not declaring the business bank account. Where any person fails to declare business bank account(s), in his registration application or fails to amend his registration profile to declare existing business bank account(s) willfully: Such person shall pay a penalty of Rs. 10,000 for each day of default since the date of submission of application for registration or date of opening of undeclared business bank account whichever is later:

    Provided that if penalty worked out as aforesaid is less than Rs.100,000 for each undeclared bank account, such person shall pay a penalty of Rs.100,000 for each undeclared business bank account:

    Provided further that this provision shall be applicable from the first day of October, 2021 during which period the taxpayer may update their registration forms.

  • FBR advised to withdraw powers of freezing bank accounts for tax recovery

    FBR advised to withdraw powers of freezing bank accounts for tax recovery

    KARACHI: Federal Board of Revenue (FBR) has been advised to withdraw powers of tax officials related to freezing bank accounts for tax recovery.

    Karachi Chamber of Commerce and Industry (KCCI) in its budget proposals for 2020/2021 submitted to the FBR highlighted provisions of Income Tax Ordinance, 2001 regarding accessing bank accounts for tax recovery.

    Under Section 140 of the Income Tax Ordinance, 2001 which deals with recovery of tax from persons holding money on behalf of a taxpayer.

    — (1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –

    (a) owing or who may owe money to the taxpayer; or

    (b) holding or who may hold money for, or on account of the taxpayer.

    This provision and further access to information on a bank accounts under other provisions of law, have been counterproductive and led to a flourishing cash economy, the KCCI said.

    It said that there were many innovative ways been evolved by businesses similar to the blockchain and local hundi system.

    Such provisions only affect the registered businesses while the entire unregistered sector is immune from such laws and a coercive approach.

    Banks are also suffering with decline in deposits and transactions which used to be conducted through the system. It is evident from a slowdown in economic activities, the chamber said.

    It is better to do way with such anti-growth and anti-business policies and laws. Powers to access the bank accounts of registered persons and to freeze account should be withdrawn through Finance Bill 2020.

    Access may only be limited to accounts of unregistered persons, but account may not be blocked or frozen.

    Commissioner should only be authorized to obtain information about the funds in accounts and should be authorized to seek clarification as to the nature of transactions and sources of funds. Such persons may be brought into the tax-net.

    The Karachi Chamber said that the proposed amendments would provide relief to the registered persons and restore confidence in banking system and would encourage official transactions.

    Besides, it would help in bringing unregistered persons into the tax-regime.

    Stimulate economic activities and growth. Increase bank deposits which may be used for lending to industry.

  • FTO committee expresses distress over tax recovery from bank accounts

    FTO committee expresses distress over tax recovery from bank accounts

    ISLAMABAD: The advisory committee of the Federal Tax Ombudsman (FTO) has expressed distress over attachment of bank accounts and coercive recovery by Federal Board of Revenue (FBR) from bank accounts of taxpayers.

    A meeting of the advisory committee of the FTO was held recently and discussed various issues related to refunds and coercive recovery of the FBR from bank accounts of taxpayers, according to the FTO new letter issued last month.

    The committee expressed great distress about the attachment of bank accounts and coercive recoveries. The participants suggested that attachment of accounts may be affected only after Tribunal’s decision.

    On the issue of refunds, the participants observed following:

    Delayed refund is a serious issue which continuously poses challenge to the survival of business community.

    Refund amount should be paid after two stages of appeals in favor of taxpayer, even if department then goes to reference before the higher court.

    An online system for tracking of refund by claimants should be put in place by FBR.

    A system of adjustment of refund in the next return should be devised to get rid of the chronic issue of delayed refund.

    Even after verification of claim, cheques are not issued in time.

    The refund payment system ought to be dovetailed with magnitude of amount as 70-75 percent of refunds fall in the category of up to Rs100,000 only and need automated settlement.

    Compensation for delayed refunds should be ensured as delayed has its own cost.

    Regarding assessment by the tax officials, the FTO advisory committee observed following:

    Arbitrary, coercive and malafide assessment is the root cause of all subsequent tax maladministration and victimization of business community.

    There is no accountability on arbitrary, coercive and malafide assessment.

    There should be some check on the quality of assessment made by an assessing officer.

    At times undated orders are issued.

  • SBP issues regulations for banks to open accounts of retail merchants

    SBP issues regulations for banks to open accounts of retail merchants

    KARACHI: State Bank of Pakistan (SBP) on Friday launched rules and regulations for allowing banks to open bank accounts for retail merchants on soft conditions.

    According to objectives of regulations issued by the central bank, to outline minimum due diligence requirements for on-boarding merchants based on simplified due diligence process.

    Further, to facilitate in on-boarding merchants at various financial services access points and channels. To promote digital collection of payments from the sale of goods and services.

    The SBP said that these regulations are applicable on Banks/MFBs, which may on-board individuals and self-employed merchants as per their institutional risk assessment framework.

    The SBP said that banks/Microfinance Banks (MFBs) shall formulate merchant on-boarding policy in line with these regulations and duly approved the same from their board.

    These regulations are not applicable on existing onboarding process of full-fledged merchants and Banks/MFBs shall onboard full-fledged merchants as per applicable laws and regulations.

    The SBP said that banks/MFBs may offer these merchants accounts as Current, Savings or in any other remunerative category in Pak Rupees to individual and self-employed merchants only.

    The banks/MFBs shall ensure that one CNIC holder can open only one merchant Account in a
    Bank/MFB. The Banks/MFBs shall ensure that Merchant Accounts are only used for digital collection of payments against the provision of legitimate goods and services.

    In order to open on-board merchant accounts, banks/MFBs shall collect following information in manual or digital form from merchants at the time of account opening:

    i. Name of the merchant
    ii. Valid CNIC number of the merchant
    iii. Mobile number of the merchant
    iv. Any other two information fields that are not present on CNIC such as place of birth and mother’s maiden name etc.
    v. Address
    vi. Merchant Type (by Profession)
    vii. Expected per month turnover

    Banks/MFBs shall activate Merchant Accounts after fulfilling following KYC/CDD requirements of merchant:

    i. Perform Biometric Verification or Verisys from NADRA. In case of NADRA Verisys, Biometric Verification shall be mandatory at the time of first cash out or within three months of opening of these accounts, whichever is earlier. These accounts shall be deactivated if Biometric Verification is not carried out within three months of opening of accounts.

    ii. Ensure Pre-screening of merchants’ particulars against lists of entities and individuals designated by the United Nations Security Council (UNSC), lists of entities and individuals proscribed under the Schedule-I and Schedule IV of the Anti-Terrorism Act, 1997, respectively, and any other applicable sanctions lists.

    iii. Conduct Call Back Confirmation or generate One-Time Password (OTP) for verification from merchants.

    iv. Carry out full or Enhanced Due Diligence of merchant as per Banks/MFBs own risk assessment, in light of applicable laws and regulations (if applicable).

    v. Acceptance of terms and conditions of account provided in English and/or Urdu language by the merchant.

    The SBP also notified following transactions limits for the accounts:

    a) Banks/MFBs shall place following maximum transaction limits on merchant accounts:

    i. Rs. 50,000 per month without Biometric Verification

    ii. Rs. 500,000 per month with Biometric Verification

    b) The above Transaction limits will be separately applied on Debit and Credit transactions.

    c) Banks/MFBs may place lower transaction limits keeping in view their institutional risk assessment and high-risk geographical locations of merchants.

    Merchant Account Balance

    a) Banks/MFBs shall ensure that merchant accounts balance shall not exceed the following limits at any point of time:

    i. Rs. 50,000 without Biometric Verification

    ii. Rs. 500,000 with Biometric Verification

  • About 7.65 million bank accounts still require biometric verification for AML/CFT compliance

    About 7.65 million bank accounts still require biometric verification for AML/CFT compliance

    KARACHI: Around 7.65 million bank accounts are still unverified till June 30, 2019. The verification of bank accounts is mandatory through biometric system in order to mitigate risks of money laundering and terror financing.

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