Payment system review.

 
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Byline: S. Kamal Hayder Kazmi

The State Bank of Pakistan (SBP) incessantly adopted contractionary monetary policy and kept the interest rate at 13.25 percent while on the other side the government had reduced profit rates on the National Savings Schemes. Experts viewed that the falling profit rates on deposits and high borrowing costs benefited the banks in term of high spread. Savings were the backbone of investment as higher savings lead to higher investment and higher growth in an economy provided that the other macroeconomic variables are conducive and a developed financial system exists in the economy.

There is a need of falling of policy rate, which is very high as against to regional economies like; India at 5.15 percent, China 4.35 percent, Sri Lanka 8 percent, Malaysia 3 percent, Thailand 1.25 percent, Indonesia 6.5 percent etc. It is also predicted that SBP has kept the interest rates high because of inflationary outlook while in Pakistan; the inflation is cost-push that cannot be controlled through contractionary monetary policy. The experts also recorded that SBP to decline the policy rate in order to raise the demand of private sector credit which will ultimately help in new industrialization and increase in economic growth rate.

On the other hand SBP recorded that the Pakistan Real Time Interbank Settlement Mechanism (PRISM) currently is the only Large Value Payment System being operated in the country. PRISM enables the transfer and settlement of high value interbank funds and enhances the overall efficiency of the large value payment system. On retail payment side, there are various e-Banking channels like Real time online Branches (RTOBs), ATMs, POS, Internet Banking, Mobile Phone Banking, Call Centers/IVR Banking and e-commerce that facilitate retail value payments.

Statistics showed that in Pakistan the commercial banks are enlarging their infrastructure for supporting e-Payments because of SBP's enabling strategies. There are 15,549 bank branches reported by the Banks/MFBs, out of which 114 are overseas branches as on quarter-end January-March, 2019.

Payment systems transactions A Summary (Volume in Million & Value in Billion-PKR)

Transaction Type###Quarter-1 FY19###Quarter-2 FY19###Quarter-3 FY19p

PRISM System###0.6###97,400.30###0.7###98,322.20###0.6###107,099.90

E-Banking###202###12,344.20###217###14,723.60###217.7###14,810.10

RTOB###40.9###10,252.60###47.1###12,427.50###46...

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