Circulars/Notifications - Payment System Department  
 PSD Circular No. 01 of 2021
March 10, 2021 

The Presidents/Chief Executives,
All Banks/MFBs,

Dear Sir/Madam,

Enhancing Digitization Initiatives in Banks/MFBs


    In light of SBP’s vision to promote digitization in the banking sector and encourage use of digital channels, the following decisions have been taken for Banks/MFBs herein referred to as Financial Institutions (FIs):

1. Governance Structure for Digitization
FIs currently offering or planning to offer digital financial services shall create a role of Chief Digital Officer (CDO) or a similar role with a different designation. The CDO should preferably be a Key Executive responsible for steering the digitization efforts of the organization. The role would be in addition to existing Key Executives as required by relevant regulations. The FIs may consider recommended Terms of Reference (ToRs) for the above position as given in Annexure-A. In addition, accelerated digitization should also be part of every CEO’s Key Performance Indicators (KPIs) and the board of the FI should monitor the achievements at least on half-yearly basis.

2. Instructions Regarding Internet Banking (IB)/Mobile Banking (MB)
    All FIs providing IB/MB services shall:

  1. Offer the minimum set of services as identified in Annexure-B through their IB/MB channels.

  2. Provide their interface in English, Urdu and where possible, regional languages.

  3. Rationalize the use of One Time Password (OTP) on their platforms to improve user experience. However, they are also encouraged to use other convenient and secure authentication factors to satisfy the 2-Factor Authentication (2FA) requirements.

  4. Ensure that there are no activation, subscription or annual charges for customers using IB/MB services.

  5. Arrange to provide full-fledged digital portal for their corporate customers (corporate portal) and align controls, transaction limits etc. to cater for their online business needs.

3. Deployment of Interoperable Cash Deposit Machines (CDMs)
In order to move towards self-service banking channels and allow round the clock banking solutions to customers and businesses, banks are encouraged to consider the deployment of Cash Deposit Machines (CDMs) at selected locations especially at branches with large number of customers.

4. Enable all beneficiary FIs for IBFT and billers which are available at SBP’s authorized Payment System Operator (PSO)
Participants and member FIs of a PSO shall ensure that all other participants, member FIs and billers of that PSO are enabled on their IB/MB/ATM channels. Further, they shall also ensure that new participants/member FIs and billers are added on their respective channels within 30 days of the date of intimation from the PSO.

5. A Card per Account Policy
To promote the use of payment cards, it has been decided that FIs shall ensure that all new-to-bank account holders and those customers who have not opted for a debit card previously, shall be issued a debit card. However, customers shall also be given the option to opt out of receiving any card. Further, photo account holders, visually impaired and illiterate persons shall be exempted from mandatory card issuance. In this regard, FIs shall ensure full compliance with PSD’s Circular No. 1 of 2020 dated January 31, 2020, in letter and spirit and shall not unnecessarily coerce and/or convince their customers to opt for cards that are not issued by SBP-approved domestic payment scheme. Detailed record of customer consent shall be maintained and made available for SBP’s inspection, as and when required.

6. Digital Means of Authentication at Bank Counters – Card Based Solutions
As per the existing practice, FIs have been using signatures and paper based instruments for authenticating customers in branches. To leverage on the existing EMV enabled card based infrastructure, FIs are now allowed to authenticate their customers at branch counters using chip-and-pin cards and 2FA prior to offering them banking services.  However, this change should be implemented without causing inconvenience to the customers.

7. Discouraging the Issuance of Cheque-books
Cheque-books that are currently being issued by default shall only be issued upon customer’s request.

Please acknowledge receipt.

Yours sincerely,


(Syed Sohail Javaad)

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