SBP cancels Easy Paisa’s microfinance license, transitioning it into a scheduled bank with new tax implications and expanded banking services.
The State Bank of Pakistan (SBP) has issued a circular, announcing the cancellation of the microfinance banking license of Telenor Micro Finance Bank, effective January 23, 2025. This decision marks a significant shift in Pakistan’s digital financial landscape, raising key questions about the future operations of Easy Paisa and its transition into a fully-fledged scheduled bank.
Transition from Microfinance to Digital Retail Banking
The circular specifies that the license cancellation is due to the granting of a digital retail bank license, allowing the newly established Easy Paisa Bank Limited to operate as a full-fledged scheduled bank. This transition is set to revolutionize digital transactions, integrating wallet payments, QR transactions, and mobile transfers into a regulated banking framework.
Operational Changes and New Banking Features
With its conversion into a scheduled bank, Easy Paisa Bank Limited will now offer traditional banking services, including loan applications, branch operations, cheque book payments, fund transfers, and digital banking. Customers will be able to access a broader range of financial services, similar to conventional banks operating in Pakistan.
Implications from a Tax and FBR Perspective
The transition also brings several tax implications under the Federal Board of Revenue (FBR) regulations. Section 165A of the Income Tax Ordinance, which mandates data reporting by banks, will now apply to Easy Paisa Bank Limited. Under this provision, the bank will be required to report the following transactions to the FBR:
- Cash Withdrawals: If an account holder withdraws more than Rs. 1 million in a month, the transaction will be reported.
- Cash Deposits: Deposits exceeding Rs. 10 million in a month will be flagged.
- Credit Card Payments: If a customer makes credit card payments exceeding Rs. 200,000 in a month, it will be recorded.
- Profit Earnings: Any profit earned through savings or term deposits will be reported, irrespective of the amount.
Special Considerations for Non-Filers
For non-filers, additional annual limits have been set by the FBR, which could impact their transactions significantly:
- Cash Withdrawals: Annual withdrawals exceeding Rs. 3.3 million will be reported.
- Cash Deposits: Deposits surpassing Rs. 28 million per year will be flagged.
- Profit Earnings: Any interest or profit earned above Rs. 500,000 annually will be reported.
Compliance and Future Considerations
Given its new status as a scheduled bank, Easy Paisa will now be required to comply with all banking regulations, including mandatory reporting to the FBR. Customers need to be mindful of these limits to avoid unnecessary scrutiny.
As the financial sector continues to evolve, stakeholders will need to monitor how Easy Paisa Bank Limited adapts to its new role and how these changes affect consumers, businesses, and regulatory authorities. The coming months will be crucial in determining how effectively the transition is implemented and how it influences digital banking trends in Pakistan.
