In a major move to accord maximum facilities to the account holders, the State Bank of Pakistan has decided to prohibit all banks from levying any service charges for opening and maintenance of regular savings accounts with effect from July 1, 2011.
Currently, the banks have fixed minimum deposit limit for saving accounts, and service charges up to Rs 600 annually are being charged from customers for non-compliance of minimum deposit condition. However, the SBP said it has observed that in recent years the number of account holders, in particular the number of small depositors, has declined despite increase in the number of bank branches. Among other factors, the levy of service charges on deposit accounts was considered to be one of the main reasons behind this trend.
With a view to arresting this situation, as well as to encouraging documented transactions and increasing financial outreach, the State Bank has issued new instructions for opening, maintenance and closing etc of all types of bank accounts, except Special Deposit Accounts wherein banks offer added services to its customers/account holders under Section 41 of Banking Companies Ordinance 1962 which would be applicable from July 1, 2011.
The new instructions supersede the instructions issued under BPD Circular No 23 dated July 4, 2003 and BPD Circular letter No 02 dated January 7, 2005, says BPRD Circular No 07 issued to all banks on Friday. According to SBP circular the services rendered by banks for the opening and maintenance of regular savings accounts shall be free of charge. There shall be no condition of maintaining a minimum balance for these accounts. These instructions are applicable equally on all existing and new accounts. Similarly, no charges would be recovered by banks at the time of closing an account, says BPRD Circular No 07 of May 27, 2011.
Banks shall not demand more than Rs 100 as an initial amount for opening of regular savings accounts. However, no initial deposit would be required for opening of accounts by (i) Mustahkeen of Zakat, (ii) Students, (iii) Employees of Government or Semi-Government institutions for salary and pension purposes (including widows/children of deceased employees eligible for family pension/benevolent fund grant, etc) and other similar types of accounts, the Circular said.
It added that the banks shall ensure that all terms and conditions for the operation of an account, especially in case of its dormancy, closing and/or subsequent reactivation are brought into the knowledge of the customer at the time of account opening. The terms and conditions shall be clearly documented in the Account Opening Form/Application and must be signed by the account holders, to signify that they have been read and understood. A copy of the Account Opening Form must be provided to the account holders duly verified by the authorised official(s) of the branch with proper record of acknowledgement. Any ambiguity in the terms and conditions mentioned in the Account Opening Form shall be construed to be in favour of the account holders.
Key features of the Account Opening Form shall be translated into Urdu and a printed copy of such translation shall be shared with the account holders at the time of opening of the account, the Circular said, and added that the banks shall not refuse opening of accounts for prospective clients who meet the requirements laid out in the Prudential Regulations, other instructions issued by SBP from time to time and banks'' own policies. Moreover, the banks shall pay profit invariably on "Profit and Loss Sharing (PLS) Accounts" without any condition of minimum balance in accordance with instructions issued by SBP from time to time.
The State Bank has also advised the banks to develop appropriate products for attracting deposits and encouraging savings. ''They shall make concrete efforts to provide maximum facilities in a friendly manner, to both existing and the potential customers/account holders for convenient/smooth operations of their accounts. Proper training may also be imparted to the concerned officials for improvement in the service delivery standards'', the Circular said.
According to the Circular, the banks shall also facilitate those Basic Banking Accounts (BBA) account holders who desire to convert their accounts from BBA to regular saving accounts.
''Banks shall ensure compliance with the above instructions as non-compliance and circumvention of instructions shall be dealt in accordance with the relevant provisions of law'', the Circular added. It may be recalled that BPD Circular No 23 dated July 4, 2003 and subsequent instructions issued by the State Bank from time to time had allowed the banks to recover service charges on deposit accounts commensurate with the services provided by them. Subsequently, SBP took a number of initiatives such as introduction of the Basic Banking Accounts (BBA), liberalisation of Branch Licensing Policy, fixation of maximum limit on service charges at Rs 50/per month, exemption of Salary and Zakat Accounts from service charges, introduction of Branchless Banking and encouraging the establishment of Microfinance Banks, with the objective of promoting savings and improving financial inclusion.
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