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Web Desk:
The State Bank of Pakistan (SBP) has issued a strict warning to all commercial and microfinance banks saying, they will be held responsible for any customer losses caused by digital banking frauds if they fail to take timely preventive measures.
The SBP said in its statement:
“Banks are required to compensate customers in case of delays in taking necessary control measures, such as blocking digital channels or raising dispute requests.”
Rising Cases of Digital Banking Fraud
Reports from the Banking Mohtasib of Pakistan have shown a sharp rise in fraud complaints, especially related to digital transactions. Fraudsters have been exploiting users’ lack of awareness and taking advantage of gaps in the system.
Fraud Protection Guidelines
To tackle this growing threat, SBP has directed all banks to enhance their digital fraud protection mechanisms against tactics such as:
- Social engineering
- SIM swap fraud
- Spoofed helpline numbers
- Identity theft
- Fake digital account registrations
As SBP statement says: “These measures are part of SBP’s broader goal to promote digital financial inclusion and build customer trust in the security of digital banking.”
Comprehensive Security Framework Required
The SBP has also released a detailed set of guidelines, requiring banks to implement a comprehensive security framework for digital products and services by December 31, 2023.
Banks are now obligated to:
- Formulate a clear Digital Fraud Prevention Policy
- Effectively communicate this policy to customers
- Design, review, and continuously improve end-to-end fraud risk management and customer complaint handling systems
Temporary Restrictions on Incoming Funds
In a major step to block fraudulently transferred funds from being misused, SBP has instructed banks offering branchless banking wallets to temporarily restrict cash withdrawals, mobile top-ups, and online purchases for two hours after any incoming fund transfer.
This sensible move aims to prevent immediate cash-outs by fraudsters and allow time for detection and response.
Bottom Line
With digital banking growing rapidly across Pakistan, the State Bank’s latest measures are a wake-up call for the banking sector. Customer protection is now non-negotiable, and any negligence will come at a cost.
