SBP revises branch licensing policy

KARACHI: The State Bank of Pakistan (SBP) on Tuesday revised branch licensing policy (BLP) to enhance the outreach of banking facilities, with a focus on rural and underserved areas.

The central bank in its notification said the provision of financial services in rural and underserved areas was the key priority to balance the distribution of branch network amongst different segments of the country.

The branch licensing policy, as one of the important tools available to the State Bank of Pakistan, allows guided expansion of the banking system, keeping the system requirements in view, and provides an insight into rationalising the branch network.

The central bank liberalised the licensing policy in 2007 to allow the banks to make their branch networking within the broad policy parameters.

Under the revised policy, the SBP introduces tier wise geographical distribution of new branches proposed under the Annual Branch Expansion Plan (ABEP) in different segments such as big cities, other cities, rural and underserved areas (RUAs) and unbanked areas. 

The State Bank of Pakistan asked the commercial banks to provide their roadmap for opening their branches during the next five years.

“As a result, the RUA requirement (including unbanked areas) will be enhanced year wise from the existing 20 percent in 2016 to 25 percent by the end of FY2021,” the State Bank of Pakistan said.

The central bank also introduced the criteria for up-gradation of sub-branches into full fledged branches.

Further, the State Bank of Pakistan enhanced the scope of big cities from 13 to 18 for the purpose of licensing policy.

Special instructions to banks have also been issued regarding accessible banking infrastructure for persons with disabilities / senior citizens/women as a part of banks corporate social responsibility, and moral obligations.