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Instructions of State Bank regarding Cost of using Digital Fund Transfer Services

The State Bank of Pakistan on 16th June 2021 issued circular PSD Circular No. 02 of 2021 whereby SBP allowed banks and other service providers to charge a minimal fee on ‘digital fund transfers’ transactions above than a prescribed limit. While the transactions of digital funds transfers of below such prescribed limit will continue to use such banking services free of cost. All banks were Instructed by State Bank of Pakistan to follow such circular which is applicable from 1st July 2021.

Previously, in the first quarter of 2020 the State Bank of Pakistan, advised banks and other service providers to offer free of cost Inter Bank Fund Transfer (IBFT) services to all their customers regardless of the volume of transaction.

Free of cost limit for digital transfer of funds

The SBP has now directed banks to provide free of cost digital fund transfer services to individual customers up to, at least, a minimum aggregate sending limit of Rs25,000 per month per account or wallet. However, banks may choose to set this aggregate limit at a higher amount as well. This will facilitate individual customers to make as many free fund transfer transactions remaining within their aggregate monthly limit of free transfers.

When banks will charge and how much on digital transfers ?

For transactions above the aggregate limit of Rs25,000 per account in a month, banks may charge individual customers, a transaction fee of no more than 0.1 per cent of the transaction amount or Rs200, whichever is lower. This will enable service providers to recover part of costs they incur on providing inter-bank fund transfer service and build sustainable and innovative business models.

No more withholding tax on banking transactions under section 231A, 236P etc.,

It is also to remember here that Government through Finance Act 2021 has already removed various tax provisions of Income Tax Ordinance, 2001 whereby withholding of tax on cash withdrawals, issuance of banking instruments and bank transfers (Under section 231A, 236P) are no more taxable.

Circular issues by State Bank of Pakistan named “Pricing of Interbank Fund Transfer (IBFT) Services

Pricing of Interbank Fund Transfer (IBFT) Services
Please refer to PSD Circular No. 02 of 2020, wherein Banks/MFBs were advised to waive all charges for customers using their online fund transfer services including Intra and Interbank Fund Transfers (IBFT).

2. It has now been decided that Banks/MFBs/EMIs shall continue to provide free of cost IBFT services to their individual customers up to, at least, a minimum aggregate sending limit of Rs.25,000 per month per account/wallet. Hence, individual customers of Banks/MFBs/EMIs shall continue to send out as many free IBFT transactions as long as they remain within their monthly limit of Rs.25,000.

3. After the monthly limit of Rs.25,000 is exhausted, Banks/MFBs/EMIs may charge their individual customers, a transaction fee of 0.1% of the transaction amount or Rs.200, whichever is lower. However, Banks/MFBs/EMIs are encouraged to provide free of cost IBFT services to their customers to promote adoption of digital payments in the country.

4. All Intra Bank Fund Transfers as well as incoming interbank fund transfer services shall remain free of charge.

5. Banks/MFBs/EMIs shall ensure proper disclosure of charged and free IBFT amounts along with applicable fees to their customers by sending regular notifications through SMS, apps and email. After every digital transaction, the customer shall receive free of charge SMS on their registered mobile numbers intimating them about the transaction amount and the charges being recovered.

6. The above instructions shall come into effect from July 01, 2021.

7. With immediate effect, it is further advised that Banks/MFBs/EMIs shall not limit the number of fund transfer transactions on their customer accounts/wallets unless there are genuine concerns related to AML/CFT or frauds. Please acknowledge receipt.
PSD Circular No. 02 of 2020
Top Tax Consultants Tax Return submission Last Date
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