News Desk |
The State Bank of Pakistan issued directives for commercial banks to begin biometrically verifying the identities of millions of account holders across the nation. According to reports by Prop Pakistan, the decision taken last Wednesday included a deadline for 30th June 2019 for existing banks and account respective account holders.
According to State Bank information, there are around 50 million bank accounts in the country out of which 16 million account holders make up the commercial market. The remaining 34 million accounts are held under the microfinance and branchless category.
The emergence of a new government was also marred by a fiscal crisis where soaring debt and inflation combined with a widening trade deficit pushed the Rupee to a record low against the dollar.
The Pakistani commercial market underwent a massive data breach on the 27th of October where data from account holders of almost all major commercial banks were compromised. Card data of nearly 16,000 clients from over 20 different banks from all over the country were reportedly stolen racking up a loss to the tune of Rs2.6 million.
Pakistan’s outdated digital security infrastructure makes it increasingly vulnerable to such attacks and only a handful of banks escaped what was possibly just a routine threat. The Federal Investigation Agency (FIA) and the SBP alongside the relevant ministries were subsequently involved in preventive measures for the future after reports of the stolen data being traded on the ‘dark web’ surfaced.
All banks are now tasked with carrying out the process of conducting biometric verification of account holders outlined in three stages. Commercial account holders will also be classified according to different turnover values, charitable organizations and associations through a separate and more complex process requiring extensive documentation.
The FIA have also tightened down on corruption and money laundering ever since the new government assumed power. The requirement of biometric verification for bank accounts will be vital in tracking suspicious financial activities especially those linked to money laundering and offshore transfers.
The SBP’s decision to implement biometric verification is necessary when it comes to formalizing the economy in order to provide relief to people.
The emergence of a new government was also marred by a fiscal crisis where soaring debt and inflation combined with a widening trade deficit pushed the Rupee to a record low against the dollar. As Pakistan edges closer to an impending bailout, a preference for a free-floating currency left heavy dents in terms of Foreign Investment, institutional autonomy of the SBP and macroeconomic indicators.
PM Imran Khan expressed his desire to “autonomise the institution” while assuring all that the indicators are now heading in the right direction under proper governance. The SBP will have to take up the role of safeguarding national currency, controlling inflation and allocating financial resources with due judgment.
The SBP’s decision to implement biometric verification is necessary when it comes to formalizing the economy in order to provide relief to people. The government, however, seeks to remain in the picture when the SBP makes any significant monetary policies.
It goes without saying that the SBP has much trust to regain from its clients and shareholders if it needs to register customer identities that even hackers can reach.