KARACHI, Aug 16: The State Bank of Pakistan is processing a draft consumer protection law to protect the banking consumers from losses. The draft law will be required to be passed into an act of parliament by the National Assembly and the Senate.

SBP Governor Dr Shamshad Akhtar said in a statement on Saturday that most of the issues related to consumers will be addressed as the central bank was processing consumer protection law and will issue fair debt collection guidelines in the near future.

The statement reminded all commercial banks to adopt fair practices and to make complete disclosure of the lending and deposit rates of all consumer products offered by them and to clarify the pricing structure of the loan in their respective loan agreements with their customers.

The existing instructions of the State Bank require banks to get the schedule of charges printed and make the same available to their customers at all branches at least seven days before the commencement of the half year.

The banks are also required to make available their schedule of charges on their websites.

Similarly, locker-holders issue has also been taken care of by prescribing the insurance ceiling as per the size of the locker. Only recently, the SBP advised all banks to pay a minimum of 5 per cent profit to all depositors regardless of their account balances.

All these instructions and other measures taken by the State Bank from time to time are manifestation of its resolve to protect the interest of banks’ customers, said the SBP release.The statement said the SBP had also taken a number of steps to ensure that consumers had access to accurate information, fair credit billing and reporting fair debt collection practices etc.

Complaints by certain quarters that banks charge very high mark-up rates on credit cards products need to be seen in the proper context, said Dr. Shamshad.

Credit cards are not a debt instrument and the banks allow credit facility free of mark-up or interest to their card holders for the period of 30 to 45 days or as specified in their terms and conditions accepted by card holders.

The card holders may make purchases and can make payments within the stipulated period without any financial charges, she said.

One of the features of credit card is withdrawal of cash. Any liberty available to the card holder to pay the amount without any mark-up or extra charges is not meant for cash withdrawals. “The high mark-up rate on credit cards can be attributed to high cost associated with their marketing, recovery, administration and fund utilisation. The same scenario exists internationally,” said the governor.

In addition to establishment of the office of the Banking Mohtasib, the SBP has established a full-fledged Consumer Protection department to effectively resolve consumers’ complaints against banks.

The State Bank has already addressed the issue of early disposal of the complaints by directing the banks and DFIs to provide remedy within a period of 10 working days. However, in any case the final reply may be sent within a period not exceeding 45 working days, barring cases where reasonable grounds exist on record for not complying within the prescribed time period, said the statement.

The SBP conducts regular inspection of all banks and DFIs and takes stern and punitive actions against the concerned bank or DFI for any untoward incident noted during the course of inspection and non-compliance of the instructions, rules and regulations issued by SBP.

“As per general practice of SBP, the draft versions of policies concerning the consumers, customers and general public are placed on its website for comments and views of the society and stakeholders,” she said.