Bank account facility for refugees to aid economy

SBP issues notification allowing registered Afghan refugees to open bank accounts

Salman Siddiqui March 01, 2019
The move will help bring Afghan refugees under the tax net as they have remained associated with big businesses and professions. PHOTO: FILE

KARACHI: In a surprise move, Pakistan has allowed registered Afghan refugees to open and maintain bank accounts in a bid to make them part of the formal economy as they have remained associated with different businesses and professions for decades.

The State Bank of Pakistan (SBP) notified on Thursday that the Afghan refugees, registered with the National Database and Registration Authority (NADRA), can open bank accounts through biometric verification.

Bankers and businessmen expressed their surprise over the development. They said they had raised no such demand, but welcomed the move, saying the decision would help bring a significant amount of money to the banking system and formal economy, which had earlier remained outside of the system due to lack of banking services to them.

The move would also help the government collect taxes from such businesses and help crush the illegal Hawala and Hundi system, which the unbanked people mostly use to make financial transactions. The central bank has also linked the move with mitigating the risk of money laundering and terror financing.

“Pakistan hosts more than 1.4 million registered Afghans who have been forced to flee their homes,” according to the United Nations refugee agency (UNHCR) website.

Thousands of Afghan refugees have remained associated with different businesses and professions for over three decades, but have used informal banking channels to make financial transactions within and outside Pakistan, especially between Pakistan and Afghanistan.

“This is a good decision,” remarked Pakistan-Afghanistan Joint Chamber of Commerce and Industry Co-President Zubair Motiwala while talking to The Express Tribune.

“The move will help bring them under the tax net as they have been associated with rich businesses and professions. The move will also help control illegal financial transactions through Hawala and Hundi operators,” he added.

Meezan Bank Head of Product Development and Shariah Compliance Senior Executive Vice President Ahmed Ali Siddiqui estimated that banks may attract 5-10% of the registered Afghan refugees initially over the next few months.

They said refugees had been engaged in big businesses like construction, transportation, hospitality industry, paper and bottle recycling, and managing shops and markets in different parts of the country. They have also been involved in transit trade through landlocked Afghanistan and bilateral trade between the two countries.

“NADRA has informed that biometric verification for opening bank accounts of Afghan refugees holding Proof of Registration (PoR) card has been made live with effect from February 26, 2019 over the existing established linkage of CNIC (Computerised National Identity Card) verification. The biometric verification service for Afghan refugees holding PoR card will work similar to the CNIC biometric verification system,” the SBP said in the notification.

“Accordingly, for opening accounts of Afghan refugees holding PoR card, banks/DFIs may accept the valid Proof of Registration (PoR) card issued by NADRA as identity document. In this regard, banks/DFIs shall verify the identity of the Afghan refugees holding PoR card through the NADRA biometric verification system for opening of an account,” it said.

Moreover, for services offered by banks to their account holders, where CNIC and biometric verification is required under the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Regulations, a valid biometrically verified PoR card is acceptable as identity document, it said. “However, banks/DFIs are advised to ensure compliance with all relevant legal and regulatory requirements including AML/CFT preventive measures instructed by the SBP for account opening from time to time,” the central bank said.

Earlier in 2018, Pakistan in collaboration with the UNHCR gave refugees access to health and educational services, strengthening social cohesion between the refugees and their host communities and helping refugees who decide voluntarily to return home.

“This year we will help some 54,000 children to enrol in primary schools and continue to ensure the rights of registered Afghan refugees are protected,” according to the UNHCR website.

Published in The Express Tribune, March 1st, 2019.

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