State Bank of Pakistan (SBP) Thursday allowed exchange companies to conduct branchless banking activities as agents of authorised financial institutions. With this approval, all exchange companies & exchange companies of 'B' category can provide branchless banking services to their customers across the country. However, they will be required to operate as an agent of any commercial, Islamic or microfinance bank for branchless banking activities.
"It has been decided to allow exchange companies to conduct branchless banking activities as agents of authorised financial institutions including commercial/Islamic/microfinance banks, offering these services under Branchless Banking Regulations issued vide BPRD Circular No 09 dated June 20, 2011," said SBP's FE Circular No 04 of 2015 issued on Thursday.
According to SBP, exchange companies that intend to offer branchless banking agent services may approach any financial institution authorised to provide branchless banking services under branchless banking regulations.
"An exchange company shall start providing these services on behalf of the authorised financial institution as and when the financial institution has been approved by the Banking Policy & Regulations Department, State Bank of Pakistan for appointing that exchange company as the agent," it added.
However, SBP has made it clear that an exchange company will not portray itself as banking company or authorised financial institution as defined in branchless banking regulations.
In addition, exchange companies will be required to intimate such arrangement and submit related agreement to Exchange Policy Department, State Bank of Pakistan, Karachi for information. Industry sources said that this move will provide new business opportunities to exchange companies. In addition, this will also help the financial institutions to provide better services under the branchless banking as exchange companies already have a strong network and are being regulated by State Bank.
They said Branchless Banking industry continues to experience upward trend and witness an increase in the value of transactions and number of m-wallet accounts which reached Rs 375.9 billion and 4.7 million, respectively during the quarter ending September 30, 2014.
However, the evolving market competition with existing eight players has caused some shift in the market share of banks for agents, number and value of transactions, etc. The agent network has now reached 186,618; there, however, remains concern regarding the quality of agents' growth.
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