The Competition Commission of Pakistan (CCP), moving under Section 34 of the Competition Act 2010, on Tuesday conducted search and inspection of Pakistan Banks’ Association (PBA) in this metropolis to impound proofs of the association’s suspected role in providing a platform to its member banks for collusively determining uniform ATM charges. The collusive activities are prohibited under Section 4 of the Competition Act, said the CCP Tuesday. The Commission had earlier conducted search and inspection of 1-Link, as the banks charging uniform ATM charges are members of and 11 major banks constitute the board of directors of 1-Link, and it was possibly playing role in this collusive activity of fixing ATM charges.
The CCP took notice of ATM cash withdrawal charges implemented by banks in Pakistan as majority of banks, i.e. 26 banks, were charging uniform amount of Rs15 for ATM cash withdrawal transactions. In the absence of any guideline from the State Bank of Pakistan (SBP), chargeability of ATM cash withdrawal services in a similar manner raised a suspicion of collusion among banks. It has come to the Commission’s notice that ATM cash withdrawal service is provided by two ATM networks/switch namely, 1-Link and Mnet.
The State Bank has mandated that all foreign and domestic commercial banks have to become members of one or the other switch to provide ATM services to their own customers as well as customers of other banks. The 1-Link is a consortium of major banks, totalling 31, and owned by the consortium of 11 major banks that own and operate the largest representative shared financial services network of country, while Mnet switch has approximately 15 members. During the enquiry in progress, SBP informed CCP that the State Bank does not monitor and regulate banks at such micro level, but it is discretion of banks to charge customers on ATM cash withdrawal services.
Suspicion of collusion was strengthened by the fact that 31 banks are member of 1-Link which may provide them a forum to discuss and agree on ATM charges. Since the banks can be differentiated in terms of ATMs installed and transactions carried out on their ATMs, therefore, their ATM charges should also vary from each other under competitive conditions.
The Enquiry Committee of the Commission while examining the impounded documents from 1-Link has found evidence suggesting that PBA, prima facie, has role in terms of discussion on pricing policy of banks in respect of ATM cash withdrawal charges.
Important data has been confiscated by the authorised officials of CCP, which will be scrutinised by the Commission. As reported by the authorised officers of the Commission, the officials of PBA provided full access to all the documents and records available in PBA’s office.
