Circulars/Notifications - Banking Policy & Regulations Department  
 BPRD Circular No. 07 of 2011
May 27, 2011

The Presidents/Chief Executives,
All Banks

Dear Sir/Madam,


This refers to BPD Circular No.23 dated July 4, 2003 and subsequent instructions issued from time to time, allowing banks to recover service charges on deposit accounts commensurate with the services provided by them.

2. Subsequently, SBP took a number of initiatives such as introduction of the Basic Banking Accounts (BBA), liberalization 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.

3. However, it has been observed that in recent years the number of account holders, in particular the number of small depositors, has declined despite an increase in the number of bank branches. Among other factors, the levy of service charges on deposit accounts is considered to be one of the main reasons for this trend.

4. Hence with the objective of encouraging documented transactions and increasing financial outreach, the following instructions on the opening, maintenance and closing etc. of all types of bank accounts, except the Special Deposit Accounts wherein banks offer added services to its customers/account holders, are being issued under Section 41 of Banking Companies Ordinance 1962. These instructions would be applicable with effect from July 1, 2011.

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.

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.

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 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 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 authorized 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 favor 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.

5. Banks are further advised 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.

6. Banks shall also facilitate those BBA account holders who desire to convert their accounts from BBA to regular saving accounts.

7. 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.

8. The above instructions supersede the instructions issued vide BPD Circular No.23 dated July 4, 2003 and BPD Circular letter No.02 dated January 7, 2005.

Yours truly,

(Mansoor H. Siddiqui)

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