KARACHI, July 4: The State Bank has made it clear to the banks that they can levy service charges on PLS deposits — but they will have to indicate the same in their half-yearly schedule of charges. A circular issued by the SBP on Friday said the central bank had reviewed and substituted the instructions relating to service charges on PLS deposit accounts. Following are the revised and substituted instructions:

(a) All terms and conditions of operation of an account shall be made known to the opener of the account at the time of opening of the account. The terms and conditions shall be clearly, explicitly and elaborately documented in the account opening form/application and must be signed by the prospective depositor/ account holder to signify having been read and understood.

(b) All account opening forms must be filled in by the account holder in duplicate, one copy of which must be returned to the depositor/account holder duly verified by the authorized officials of the branch under proper acknowledgement.

(c) The banks can levy service charges on all types of PLS deposits provided these charges are indicated in their half-yearly schedule of charges.

(d) In case of accounts where no express clause was provided in account opening form for levy of service charges i.e. accounts opened prior to March 17, 2001, the banks may recover service charges provided each of the following conditions are met meticulously: i) a reasonable time i.e. at least six months is allowed in advance to account holders intimating the intention of the bank to levy service charges; ii) account holders have been informed about the levy of these charges through a letter while dispatching the half-yearly statements of accounts; iii) the banks display the effective date for levy of service charges in each of their branches for information of their customers.

The circular directs the banks that accounts maintained by (i) students (ii) Mustahiqueen of Zakat (those who can seek Zakat under the rules of Shariah) (iii) employees of government/semi government institutions for salary and pension purposes shall be exempted from levy of service charges in any manner whatsoever.

“In case it is found on the basis of complaints received or during the course of on-site inspection by the SBP that the banks without completely complying with the above instructions are levying/recovering service charges, punitive action will be taken,” warns the SBP.