Dubai Islamic Bank Pakistan to offer branchless banking services

KARACHI — Dubai Islamic Bank Pakistan Limited (DIBPL), a 100 per cent owned subsidiary of DIB, has received a green signal from Pakistan’s central bank to provide branchless banking services in the country, a top official said.

By Muhammad Riaz Usman

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Published: Mon 19 Apr 2010, 11:24 PM

Last updated: Mon 6 Apr 2015, 9:41 AM

Dubai-based bank will offer branchless banking services at convenient public locations like shopping malls, clubs, societies and schools, said Syed Salim Raza, Governor, State Bank of Pakistan, or SBP, said.

“State Bank of Pakistan has recently allowed Dubai Islamic Bank to offer branchless banking at convenient public locations in Pakistan. The branchless banking services will be provided by creating ‘Branchless Banking Desks’ at these public locations where Dubai Islamic Bank’s staff will serve the customers’ banking needs,” Raza said.

DIBPL has shown tremendous improvement in performance since its launch in 2006. The bank opened 10 branches in 2009 and plans to add another 30 branches this year. It posted a profit before tax of Rs280 million for the first nine months of 2009.

The SBP Governor observed that the increasing use of branchless banking will help lift the trajectory of financial inclusion in the country.

He was delivering his key note address on the ‘Need for Alternative Delivery Channels in Promoting Access to Finance’ after inaugurating Pakistan Branchless Banking Conference at SBP Learning Resource Centre in Karachi on Saturday.

Raza said the central bank will continue to actively engage with both financial and non-financial players to stimulate the adoption of innovative delivery channels as part of its multi-pronged strategy to expand the frontiers of financial access in Pakistan.

He said the State Bank has provided the necessary regulatory environment which promotes experimentation and uptake of branchless banking. However, he emphasized that the private sector still needs to take necessary steps in this direction.

“The providers should set realistic expectations of their time horizons and potential returns,” he said and adding that those institutions which build their competence to manage potential risks early, will have more robust results.

He said that Pakistan’s financial sector is experiencing a dynamic transition, led by the increasing uptake of technology solutions.

“This transition can be witnessed through recent e-banking data, with the transactional volume of 46.4 million e-payments valuing Rs 4.1 trillion during a single quarter of October-December 2009,” he added.

Raza further said that these volumes are expected to grow substantially as Pakistan has currently 95 million mobile phone users in comparison to 26 million bank account holders. This situation pinpoints the inherent potential for mobile banking in Pakistan, and the need to leverage technology to promote financial inclusion to the geographic regions — hard to reach by conventional banking channels, he observed.

He said that Pakistan is the first country in South Asia to have issued Branchless Banking Regulations, providing commercial and microfinance banks a supportive regulatory environment for developing partnerships and innovative delivery channels to promote financial inclusion in Pakistan.

The SBP Governor said that with an enabling regulatory structure and growing technology sector, Pakistani banks and microfinance players can now utilise international best practices and models to diversify their financial services and develop partnerships for managing special initiatives. “There are almost 4 billion unbanked people in the world and the existing outreach in Pakistan is about 12 per cent only. Hence, it is in our best interest to develop an inclusive financial system which also provides low income and marginalised communities with increased access to quality financial services so that they could become a critical component in the country’s economic development,” he said.

Referring to three models of Branchless Banking which are in operation in the country, the central bank governor said that under the first model, known as Microfinance Bank’s kiosks at retailer’s premises, more than 40,000 borrowers have been reached out through 68 offices of Pakistan Post.

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