PESHAWAR: Illegal money transfer hits bank business
By Mohammad Ali Khan
PESHAWAR, Nov 1: Transfer of money through illegal channel is affecting the business of commercial banks which are unable to operate in restive tribal areas and southern districts of the NWFP because of security reasons.
Senior executives of major banks in Peshawar told Dawn that most of the financial institutions had suspended their operations in South and North Waziristan and shifted their branches to Bannu district, leaving the market open for illegal practices.
“Illegal operators, who have always been the foremost choice of their domestic and overseas clients for money transfer because of low charges and less documentation, are having a field day because of the absence of commercial banks in the market,” they said.
A tribesman from the Kurram Agency, which shares boundaries with North Waziristan and Khyber agencies, told Dawn that he wanted to make a Telegraphic Transfer (TT) from Peshawar to Parachinar, but the bank which had been maintaining his account for a long time refused to entertain the request because of security reasons.
“The manager told me that the bank even avoids making TTs to the settled districts of the province,” he explained.
An executive of a leading bank said his bank had wound up its two branches in Miramshah and Mirali and shifted them to Bannu. He said the two branches had been looted twice last year.
He was of the view that since there was not a single bank to offer services in tribal areas, people had to rely on illegal operators who offer services at much lower cost than banks.
He said the situation in NWFP’s southern districts, particularly Dera Ismail Khan, Bannu and Tank, had not improved either and these were still considered high-risk areas.
Another executive of a bank said that the business of financial institutions was closely linked with commercial activities of an area where they operated. He maintained that the deteriorating law and order situation had badly affected banks’ business in southern districts and DI Khan, Bannu and Tank.
He said branches of almost all banks operating in these areas were passing through a critical time from the security point of view and business as well. They were facing difficulties in achieving their monthly targets of deposits.
He described the imposition of withholding tax on cash withdrawal as one of the reasons people switching over to illegal operations. He said that due to withholding tax businessmen preferred hundi or hawala for transfer of their money.
