Finance Ministry Removes Banks from Pension Biometric Verification, Limits Their Role to Disbursement Only
The government has revoked commercial banks’ administrative duties in proof‑of‑life (PoLC) verification for pensioners, making Nadra the sole verifier and keeping banks only as payout agents, while also exempting pension accounts from dormancy rules.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Banks lose PoLC verification fees and related services, leading to a negative outlook; avoid buying bank stocks.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- BanksNegatively affected
Companies
Companies Mentioned
- ISL· Negatively affected · Do not buy
Mentions in This Briefing
Sectors: Banks — Negative · Do not buy. PSX tickers: ISL. Banks lose PoLC verification fees and related services, leading to a negative outlook; avoid buying bank stocks.
Full Story
Open on Dawn## New SOPs Eliminate Bank Involvement in Pension Biometric Checks
The Ministry of Finance issued revised standard operating procedures (SOPs) on Monday, removing the administrative function of commercial banks in the biometric verification and validation of proof‑of‑life certificates (PoLCs) for pensioners. The change follows directives from Prime Minister Shehbaz Sharif to streamline pension payments.
## Nadra Takes Over Verification via Secure API
Under the new framework, the National Database and Registration Authority (Nadra) is directly linked to the Controller General of Accounts (CGA) and the Military Accountant General (MAG) through a secure application programming interface (API). The digital life signal will now flow from Nadra to CGA/MAG, bypassing banks entirely.
## Banks Remain Only as Disbursement Agencies
Commercial banks will continue to act solely as pension disbursement agencies. They are prohibited from collecting, retaining, or validating PoLCs or biometric data in ordinary banking operations, except when acting as an authorized conduit for Nadra’s system. The previous “Disburser’s Half” paper process is abolished, and all federal pensions will be paid through the Direct Credit System (DCS).
## No Dormancy Restrictions for Pension Accounts
The SOPs also state that pension‑disbursing accounts will no longer be subject to standard bank dormancy requirements. Banks cannot place these accounts in dormant or suspense status, nor can they impose debit restrictions for missing PoLCs. Any dormant accounts must be re‑activated through Nadra verification or by receiving a credit from CGA/MAG from September 2026.
## Verification Options for Pensioners
Pensioners can now verify their PoLCs via the Nadra PakID mobile app, at Nadra registration centres, mobile units, e‑Sahulat franchises, or at bank branches that function strictly as Nadra PoLC centres. Verification must occur at least once every 180 days, offering flexibility compared with the former fixed March‑September schedule.
## Impact on Banks and the Wider Financial System
The Ministry consulted the State Bank of Pakistan, Accountant General Offices, Nadra and other stakeholders while drafting the SOPs. By stripping banks of verification duties and removing dormancy rules, the government aims to reduce administrative burdens on pensioners and improve the efficiency of pension payouts.
## What This Means for Investors
The reduction in banks’ ancillary services could lower fee‑based income streams for the banking sector, while the continued role as disbursement agents preserves core deposit‑taking functions. Investors should monitor how banks adjust to the loss of PoLC‑related revenue and whether any cost efficiencies offset the impact.