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Friday, September 28, 2007

Bank Accounts - No introductions needed now

‘Introduction’ not required for opening bank account

By Shahid Iqbal

KARACHI, Sept 27: The State Bank of Pakistan on Thursday removed the condition of obtaining a reference or introduction for opening a bank account The SBP has amended the Prudential Regulations which required banks to obtain ‘introduction’ for opening a new account with a view to assessing the integrity, respectability and the nature of business, etc. of a prospective customer.

The ‘introduction’ had been a major hurdle to opening an account with a small amount of money as banks considered managing such accounts a costly affair.

The central bank said the matter had been examined against the backdrop of enhanced scrutiny of customer’s identity, integrity, profession and sources of income, etc. under Know Your Customer and Customer Due Diligence (KYC/CDD) framework and observed that completion of the requirements under KYC/CDD in letter and spirit provides sufficient information about prospective customer.

“The requirement of obtaining references etc. in the form of introduction by an existing accountholder or a bank employee was not serving any purpose,” said the SBP.

The SBP has been encouraging common people to open accounts with small money and former SBP governor Dr. Ishrat Husain had introduced Basic Account which could be opened with just Rs5,000 and banks were bound not to charge extra money on these accounts.

The bank announced immediate omission of the ‘introduction’ condition. However, banks/development finance institutions have been advised to ensure meticulous compliance of all other KYC/CDD requirements under the Prudential Regulations.

In a recent seminar, foreign bankers expressed surprise that the banking industry in Pakistan has only five million accounts in a population of 160 million. They said it was a sign of poor banking and low economic activity which reflected the high level of poverty.

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