Asking banks to develop a mechanism, within a week, for fast delivery of home remittances, the State Bank of Pakistan said on Saturday that under the 'Pakistan Remittance Initiative' (PRI) the beneficiary would get remitted amount instantly, where the beneficiary is maintaining account in the same bank.
However, in case where the beneficiary is maintaining account with a bank other than the recipient bank, the recipient bank will intimate, and give credit of the same, to the other bank within 24 hours of the receipt of the funds.
The SBP has also instructed 'authorised dealers' that in case where the amount of remittance is not credited/paid to the beneficiary in specific time, the beneficiary would be entitled to a return of sixty five (65) paisa per thousand rupees per day for the number of days credit/payment on account of remittance delayed.
After announcing PRI, the central bank issued two different circulars for fast delivery of home remittances. Under the PRI, the State Bank of Pakistan has directed all authorised dealers to credit the remittance amount into the beneficiary's account instantly, where the beneficiary is maintaining account in the same bank.
The SBP has also asked all authorised dealers to develop a mechanism, within a week, for fast delivery of home remittances, otherwise strict action would be taken as per Banking Companies Ordinance, 1962.
Reliable and efficient payment systems are vital to facilitate delivery of home remittances securely and efficiently, the SBP said in PSD Circular No: 02/ 2009, and added that the central bank has already taken initiative to develop Payment Systems Architecture of the country.
The SBP has asked the banks to make sure automatic delivery of home remittances in beneficiary account/over the counter system, in real time, generating confirmation SMS to remitter and the beneficiary. Besides development of robust and reliable ATM network to offer an option to the beneficiary of home remittances to withdraw cash even after banking hours and on holidays
Development of integrated and secured payment system infrastructure of Alternative Delivery Channels (ATM, POS, IVR, Call Centre, Mobile Banking) offering option to beneficiary of home remittances to make party-to-party payments, payments at merchant sites, payment of utility bills, fund transfer, etc. This would encourage beneficiaries to maintain balance in bank accounts, eventually helping increase savings/deposits. These goals would be achieved through phased implementation of Payment System Strategy.
In the first phase, banks will be able to use Real Time Gross Settlement to transfer and settle interbank transactions. This would enable banks to transfer interbank transactions into beneficiaries' accounts on the same day.
Initially, five banks--ABL, HBL, MCB, NBP and UBL--have been selected to be part of this initiative. Additional participants may be added, going forward, subject to pilot tests. Participating banks under Pakistan Remittance Initiative (PRI) are required to comply with the procedure announced by SBP.
Banks need to undertake proper liquidity management for reserve requirement and cash management at key geographical ATM and branch levels to accommodate anticipated increased volume and ensure smooth delivery of home remittances to the beneficiaries/account holders.
The SBP is also planning to provide facility to securely exchange data pertaining to interbank transactions online to effect to individual beneficiary account within stipulated time. However, banks should transfer data through secured/encrypted e-mail until the secured FTP server facility is made available.
Participating banks are highly encouraged to take some steps including enabling a system to send SMS to the remitter and the beneficiary, after crediting the remittance amount in the beneficiary account or in the system for the cash payment at the counter. Install ATMs at key locations/branches to facilitate cash withdrawals after banking hours and on holidays.
In this regard they may also take measures to create awareness among beneficiaries to use ATM for cash withdrawal. To promote use of e-Banking/m-Banking Channels to make payments at merchant sites, transfer of funds, pay utility bills etc, which are available even after banking hours.
In this regard banks may consider issuing Remittance Cards and reduce/waive various fees and charges on the use of these channels. Participating banks need to ensure adequate controls in the process of transfer and payment of remittances in/through beneficiaries' account and over-the-counter payments.
Furthermore, they are also required to carry out procedures required to ensure strict compliance of all SBP rules & regulations including those related to KYC and AML/CFT measures. All other laws, regulations and SBP instructions relevant to remittances will also be applicable in addition to this circular, the SBP said. It said: PSD Circular No: 02/ 2009 is being issued under Payment Systems and Electronic Funds Transfer (PSEFT) Act 2007, and non-compliance will be subject to penalty and compensation under the relevant clauses of PSEFT Act 2007.
SBP in its FE CIRCULAR NO. 04, addressing head/principal offices of all authorised dealers in foreign exchange has directed that in case where the beneficiary is maintaining account within the same bank, the amount of remittance will be credited to the beneficiary's account instantly.
SBP said that with a view to encourage overseas Pakistanis and others to use banking channels for home remittances, and to protect the remitters/beneficiaries from any losses that they may incur due to unwarranted delays in receipts of funds in the beneficiaries' accounts, it has been decided that the banks shall put in place a mechanism, within a week, which will, inter alia, ensure that:
i. In case where the beneficiary is maintaining account within the same bank, the amount of remittance will be credited to the beneficiary's account instantly.
ii. In case where the beneficiary is maintaining account with bank other than the recipient bank, the recipient bank will intimate and give credit of the same to the other bank as per guidelines in PSD Circular No 02/2009 dated August 22, 2009, maximum within 24 hours of the receipt of funds. The bank maintaining the account of the beneficiary, after receiving intimation and funds from the recipient bank, will give credit to the beneficiary's account instantly.
iii. In case where the payment is required to be made through Pay Order/Demand Draft to the beneficiary, the bank will issue and dispatch the same within 24 hours of the receipt of funds by the bank.
iv. In case where the banks are offering the facility of cash over the counter to the beneficiary, the banks shall ensure the availability of the funds instantly. SBP said that in case where the amount of remittance is not credited/paid to the beneficiary as given in para 2 above, the beneficiary shall be entitled to a return of sixty five (65) paisa per thousand rupees per day for the number of days credit/payment on account of remittance was delayed.
The banks are, therefore, directed to ensure that the amount of remittances is credited/paid to the beneficiary within time frame laid down in para 2 above. In case of delays in the crediting/making payment of remittance amount, they shall remunerate the beneficiaries at the rate given above.
In addition, where a tendency is noted by the State Bank on the part of any bank, either through inspection or on the basis of the pattern of complaints, to delay the credit/making of payment to the beneficiary's account, penalties shall be imposed on such banks under the provisions of the Banking Companies Ordinance, 1962.