Bank Alfalah Limited (BAFL) has announced the immediate withdrawal of its recently introduced 5% monthly fee on month-end balances exceeding Rs. 5 billion. The decision marks a shift in the bank’s approach to managing high-value accounts. The fee, initially disclosed in the bank’s Schedule of Charges dated November 12, 2024, applied to balances across all checking accounts.
The introduction of this fee had sparked similar measures from other leading banks, including Habib Bank Limited (HBL) and The Bank of Punjab (BoP). These institutions also imposed monthly charges on large account balances, signaling a growing trend among banks to address liquidity challenges and manage deposits more effectively. However, Bank Alfalah’s move to rescind the fee suggests a recalibration of its strategy, potentially influenced by customer feedback and competitive considerations.
In a related development, the State Bank of Pakistan (SBP) has issued new directives aimed at Islamic Banking Institutions (IBIs). According to the central bank, IBIs are now required to pay profits on PKR savings deposits equivalent to at least 75% of the weighted average gross yield across all their pools. This policy excludes deposits held by financial institutions, public sector enterprises, and public limited companies. The SBP’s directive reflects its commitment to ensuring equitable profit-sharing mechanisms within the Islamic banking framework, enhancing the appeal and transparency of Islamic financial products.
Bank Alfalah’s decision to eliminate the high-value account fee comes amid growing competition in the banking sector. The policy, initially intended to discourage excessive liquidity in customer accounts, has now been reversed, likely to retain high-value customers and address market sensitivities. For depositors, especially those maintaining significant account balances, the fee’s withdrawal provides relief and may influence their banking preferences.
At the same time, the SBP’s mandate for IBIs is expected to bolster depositor confidence by ensuring fair returns on savings. By enforcing a minimum profit benchmark, the central bank aims to align Islamic banking practices with customer expectations while maintaining compliance with Shariah principles.
These developments highlight broader trends in Pakistan’s banking sector as institutions balance profitability, customer satisfaction, and regulatory compliance. Bank Alfalah’s swift response to market dynamics could encourage other banks to reconsider their own fee structures, fostering a more competitive and customer-focused environment. Similarly, the SBP’s proactive measures signal a continued emphasis on transparency and fairness in the financial system.
The removal of Bank Alfalah’s high-value account fee and the SBP’s directives on Islamic banking profits represent significant steps toward reshaping banking practices in Pakistan. These changes are expected to influence customer behavior and reinforce trust in financial institutions, underscoring the importance of adaptive strategies and regulatory oversight in a rapidly evolving financial landscape.