The State Bank of Pakistan (SBP) has raised an alarming issue regarding the vulnerability of depositors’ funds in commercial banks due to the use of unauthorized mobile applications for online banking services. In a notification to regulated entities (REs) providing digital banking services, the central bank expressed concerns about the integration of unlicensed digital lending apps with customers’ bank accounts, posing risks to consumer protection and potential harm to the reputation of banks.
The SBP explicitly instructed REs, including commercial banks, microfinance banks, payment system operators, payment service providers, and electronic money institutions, to refrain from offering services to unlicensed digital lending platforms. These services include deposits, lending products, mobile app integration with third parties, payment gateway services, credit scoring, creditworthiness checks, wallet services, and API integration services.
IT expert Noman Ahmad emphasized the importance of disclosing the names of financial institutions involved in offering services through unlicensed applications. By doing so, depositors would have the opportunity to withdraw and safeguard their funds before any untoward events occur. He expressed surprise that unauthorized mobile platforms were operating despite the SBP’s responsibility as a regulator.
The SBP’s notification advises REs to verify the licensing status and authorization of digital lending platforms and mobile applications through relevant regulatory bodies. It also emphasizes the implementation of robust measures during customer onboarding and transaction monitoring to prevent unauthorized financial service providers from exploiting banking channels and platforms, directly or indirectly.
With Pakistan’s banks managing deposits worth approximately Rs23 trillion and serving millions of depositors, ensuring the safety and security of customers’ funds is of utmost importance.