President Dr. Arif Alvi has directed the Banking Ombudsman to address the issue of banking frauds with the State Bank of Pakistan (SBP) and to issue essential Standard Operating Procedures (SOPs). The President emphasized the need to blacklist the CNICs of proven fraudulent individuals, placing them on a central negative list to restrict their access to banking and financial facilities.
These instructions come as the President rejects two separate appeals filed by United Bank Ltd (UBL) and Bank Alfalah Ltd (BAL). The appeals urged the banks to pay Rs1.9 million and Rs0.744 million, respectively, to customers who were victims of online banking fraud.
In one case, Qaiser Mehmood, a UBL account holder, received a call resembling the bank’s helpline, advising him to activate his disabled digital banking app. Upon activation, Rs2 million was fraudulently transferred from his account through multiple transactions. Similarly, Brig (Retd) Muhammad Arif Shaikh received a call from fraudsters requesting his banking credentials to address purported technical flaws. Subsequently, Rs994,000 was transferred from his account through 19 transactions.
Despite seeking refunds from their respective banks, the customers received no assistance. They separately approached the Banking Ombudsman for relief, who directed the banks to reimburse the lost amounts. The banks contested the Ombudsman’s decisions by filing representations with the President.
After personally hearing the cases and reviewing the available records, the President decided in favor of the complainants. He observed that the banks were non-compliant with SBP directives regarding the implementation of monitoring systems to detect fraudulent transactions.
The President emphasized that multiple consecutive transactions did not raise alerts, allowing the fraudulent money transfers to occur. He noted that the banks also failed to establish the legitimacy of transactions, as required by the Payment System and Electronic Fund Transfers Act, 2007, Section 41.
Despite ample opportunities, the banks did not provide proof of compliance with SBP directives. The President concluded that malpractice and maladministration were established on the part of the banks, and they were liable to compensate the financial losses of the complainants.
The President rejected the representations of UBL and BAL and directed them to pay Rs1,998,500 and Rs744,000 to Qaiser Mehmood and Brig (Retd) Muhammad Arif Shaikh, respectively.