SBP issues framework for payment systems

KARACHI: The State Bank of Pakistan (SBP) on Tuesday developed a framework for the payment system providers, which will help ensure smooth operations and better risk management of the payment systems in Pakistan, a circular said.

“Considering the need for the enhanced oversight of payment systems and exercise its powers under various provisions of the payment systems and electronic fund transfer (PS&EFT) Act 2007, the SBP has decided to issue payment systems designation framework (DPS), it added.

“DPS will be subject to comprehensive oversight of the operational and governance arrangements by the SBP.” The Section 4 of PS&EFT Act 2007 empowers the central bank to designate a payment system by a written order if it is in public interest.

The DPS are usually systemically important payment systems (SIPS) and any deficiency in their designs or disruption in their operations can potentially endanger the working of the real economy, besides the financial markets.

The designated payment systems can include payment systems operated by both the State Bank of Pakistan and private entities, the circular said. Designation aims at ensuring efficient management of various risks associated with the operations of DPS, including, but not limited to legal, credit, liquidity, settlement, operational, general business, custody, and other risks, it added.