The meeting was attended by NFIS Council members including Governor State Bank of Pakistan (SBP), Finance Secretary, Secretary Economic Affairs Division (EAD), Chairman Federal Board of Revenue (FBR), Chairman Securities and Exchange Commission of Pakistan (SECP), Chairman Pakistan Telecommunication Authority (PTA), Chairman National Database & Registration Authority (NADRA), representatives from provincial finance departments of all provinces, AJK & Gilgit-Baltistan and also special invitees from Finance Division and SBP.
The issue of adjustment of withholding tax on cash withdrawals by BB agents was discussed in the meeting. The council was apprised that the BB agents conduct banking transactions on behalf of their customers and such transactions are being settled on daily basis which attract withholding tax when withdrawals exceed Rs 50,000 limit. It was, therefore, proposed that the FBR may consider adjustment of withholding tax on cash withdrawals by the BB agents to the extent of disbursements made to their clients.
The SBP team further shared that a detailed proposal in this regard was developed in consultation with the industry. Subsequently, a meeting of concerned stakeholders, ie, SBP, banks, Finance Division and FBR was held recently, wherein the FBR has principally agreed on the above recommendation. Text of amendment is now being finalised which will be submitted to the FBR for further action.
According to sources, the Council''s observations revealed how it would be verified that the funds to be withdrawn by the BB agents would only be used for BB transactions. The SBP official clarified that the record of BB transaction is properly maintained and these transactions can be verified. The SBP official suggested that BB agents need to maintain separate accounts for their BB transactions. While concluding the discussion on the recommendation, the chairman suggested that keeping in view the financial inclusion as a national priority, the FBR may consider it subject to the conditions that agents shall maintain separate accounts for the BB transactions and such transactions would be verifiable and the aggregate withdrawal by per person per day will not exceed Rs 50,000.
Moreover, the chairman of the Council also asserted that the proposed amendment in Income Tax Ordinance, 2001 for adjustment of withholding tax on BB agents would be adopted through Finance Bill 2017-2018 at the time of budget.
The SBP expressed sincere gratitude to the chairman NADRA, chairman FBR and PTA team for consideration of relevant recommendations with respect to promotion of digital financial services.
Digital Transactional Accounts Scheme (DTA) - Asaan Mobile Account (AMA): The SBP official provided an overview of DTA scheme named by the Branchless Banking (BB) players as Asaan Mobile Account (AMA) scheme. He stated that the scheme has been developed after multiple deliberations by the technical committee on digital financial services and its working groups. It was also highlighted that during the consultative process, the scheme was shared with the World Bank and their feedback has been incorporated. It was further mentioned that the NFIS steering committee reviewed the scheme in its last meeting and after detailed discussion recommended it to the NFIS council for approval.
While sharing the purpose of the DTA scheme, the SBP official explained that the scheme would facilitate all digital financial service providers to join an integrated platform that will allow anyone to open a digital transaction account through a unified USSD or string channel from anywhere at any time. The primary objective of the scheme is to provide an easy, swift, secure and cost-effective channel to bring about shift in financial behaviours by encouraging people to adopt digital financial services instead of conducting transactions through cash. The scheme will incentivise the industry to develop the required ecosystem to facilitate digital financial service.
The Council was also apprised of the potential funding sources which included DFID-sponsored Financial Inclusion Programme, World Bank''s Financial Inclusion and Infrastructure Project and ADB Improving Access to Financial Services Fund (IAFSF), etc.
On the issue of providing direct subsidies on electricity, gas, etc, the chairman of the NFIS Council advised that under the existing arrangement, transfer of such subsidies through AMA is not feasible. Therefore, he said that this feature should be dropped from the scheme.
During the meeting, the SBP official commented that opening of AMA will not require any biometric verification as the request will be processed through biometrically verified SIMs. On the query of the chairman for float income on AMA accounts, the SBP official clarified that the BB providers will offer incentives/pay return on maintaining balance in AMA.
The secretary EAD inquired whether there is any incentive structure within AMA for merchants who charge extra if payments are made digitally. The SBP official clarified that the scheme would help build the ecosystem of digital financial services. He further disclosed that SBP intends to launch innovation challenge round/ facility that will focus on bringing innovative products and services and encourage merchants to accept payments digitally.
The chairman FBR emphasised on the need for taking appropriate measures to facilitate the uptake of digital financial services. The SBP official disclosed that AMA would be of great help to document the economy. The general manager, Finance Department Punjab, while supporting the use of AMA for salaries and pensions suggested that government''s policy in this regard needs to be reviewed and amended.
The secretary finance shared that such policy matters will be reviewed to facilitate pension disbursements through AMA. With these comments and suggestions, the NFIS Council unanimously agreed to the scheme and its components. Updates on the recommendations for promotion of Digital Financial Services (Rationalization of verification costs for BB accounts): The Council was informed that in order to facilitate mass enrolment of DTAs, it was recommended that NADRA may consider in providing additional data fields required for necessary KYC requirements irrespective of their volume to all BB provider for opening of BB accounts, under the agreed discounted price structure as per MOU signed by the SBP and NADRA.
The council was informed that a meeting of banks representatives under the lead of deputy governor SBP and NADRA official was held wherein NADFA had arranged to allow the same price ie Rs 10 per request for string based account opening with recommended additional fields, besides biometric verification service (BVS), sources added.
Copyright Business Recorder, 2017