When people see the chance to make an easy million rupees, you can always be guaranteed a little creativity to game the system. Of particular evil genius are branchless banking agents at shops who distribute welfare payments to Pakistan’s poorest listed on the Benazir Income Support Programme.

The director of the BISP in Karachi, Fauzia Basharat, is quite candid about the reality of scamming. “We know what happens with people and we cannot deny it,” she told SAMAA Digital. “But we are doing the best we can to stop this.”

This is why the tranche for February had been delayed as consultations were held with the Bank that facilitates the transactions. “There were things that we had to discuss and sort out with the bank to avoid any discrepancies in the future,” she said.

The BISP is an unconditional cash transfer program for roughly 5.7 million poor households. The federal government used to give them installments of Rs5,000 every three months. This has been changed to Rs2,000 every month. In 2018 the BISP distributed Rs98 billion out of the Rs108 billion it received from the government and donors. In 2017, it distributed Rs103 billion out of Rs107 billion.

The money is disbursed through shops that sign up as branchless ‘banks’. The shops are assigned an ID from the BISP. They are known as Points of Sale or PoS. For a woman to be a BISP beneficiary she has to be chosen or on the official list and in the Nadra database with a computerized national identity card and verified fingerprints. She just has to go to the Point of Sale Agent and stick her thumb on the biometric verification machine to receive her payment. Once she is cleared, the PoS agent has to give her Rs2,000 in cash.

Skimming

The simplest way the PoS agents defraud the BISP beneficiaries is by charging them a ‘commission’ or ‘fee’, which is not part of the SOP. 
“They charge all of us Rs200 or more on each installment,” said Khalideena in Lyari, Karachi. She said a chunk of the Rs5,000 was withheld by the shopkeepers who do the transactions.

Some women like Khalideena are aware that PoS shops are not allowed to charge a BISP beneficiary, but, according to her, it is a hassle and embarrassing to complain about losing two hundred rupees. This is why she looks the other way.

An assistant director-level official, requesting anonymity, said that each PoS conservatively caters to around 5,000 beneficiaries. If each woman were hypothetically charged as little as Rs200, skimmed off the top, that could translate into one million rupees siphoned off by one PoS shop.

Another woman in Lyari, Sherbano, at the same PoS, said that she did not put up with the skimming. “I know the rules now. I don’t let any shopkeeper trick me or anyone while I’m around,” she said. She has not only complained but knows an official or two by name.

A third woman, Razia, is however, convinced it is futile to bring this up. “Why would I waste so much money and energy on rickshaw fare to go to the BISP office for Rs200 robbed from me by an ID operator,” she said. “[Khalideena and Sherbano] are lucky that one of them knows officials and the other is charged only Rs200.” She and her relative have to give up Rs300 on each installment because resisting is a bigger price to pay. Everybody has grown used to this so there’s hardly any resistance, she said.

When Razia’s complaints were checked with BISP Director Fauzia Basharat, she said that she had sent the credentials of the PoS from Shoe Market, where Razia, among thousands others were defrauded, to the bank for suspension as the numbers of complaints against this PoS had grown out of proportion.

Some PoS operators claimed beneficiaries willingly shared a small chunk of the amount in gratitude. But as one beneficiary put it: “If we were that rich, to share this money with shopkeepers who already have businesses, we would not humiliate ourselves with BISP to begin with.”

Some beneficiaries told SAMAA Digital that they thought it was the legal right of a PoS to charge as much as they did. They were led to this conclusion since they did not get any response from BISP officials when they complained about it.

Former BISP chairman Kaiser Bengali did not believe the information from the beneficiaries wholly credible. “The system is very much transparent and sophisticated, and our people are not that illiterate to let shopkeepers steal their money,” he said. People in Pakistan fight over pennies with bus conductors. To think that they’d let shopkeepers rob them of Rs200 is absurd. There are rare cases of malpractice, he said, but one or two don’t mean it is widespread.

Faking

PoS shops also do branchless banking for regular non-BISP transactions. (Think of EasyPaisa or Jazz Cash). But for these transactions, they do get to make a commission of nine rupees from the bank.

Usually, if someone in Karachi wants to send money to Bahawalpur, for example, they go to an agent that has signed up with a bank to provide people branchless mobile banking money transfers. Every bank in Pakistan offers this service through such PoS agents. The PoS shop agent charges the Karachi customer a small fee or commission to transfer their money.

The trouble starts with the pressure that banks create by giving branchless agents financial targets for the month, a PoS agent said. For example, hypothetically, a PoS has to transfer a target of Rs300,000 of people’s money. The problem is that these agents don’t get enough customers to meet these targets. They have, however, found a way to game the system to show they have fulfilled the quota. They fake transactions to meet their quotas. They call this fudging “bundle marna”.

If say a PoS agent has to show the bank he has transferred Rs300,000 in a month but he has only managed Rs200,000, he falls Rs100,000 short. He then gets Rs100,000 of his own money and uses the CNICs of two friends to transfer that money between them. They are his dummies to show a real branchless banking transfer. Sometimes he does it from his PoS with the PoS in the next street.

But where does he get the Rs100,000? “How do we compensate for that cost?” said a PoS agent. “Obviously, we have to cover it by charging the BISP beneficiaries.” He skims it off the BISP beneficiaries by scamming them. And in return, bank officials look the other way because their quotas are being met.

Lying

One of the PoS operators from rural Sindh admitted to siphoning off even entire BISP installments in spite of the bio-metric verification system. They just lie to the BISP beneficiary that the fingerprinting isn’t working, when in reality the transaction has gone through. “We tell them their thumb impressions are not verified even when they are,” he said. “After an argument, the BISP woman leaves without her money, but we have their entries and we enjoy their installments.”

The rule is that a PoS will be fined Rs10,000 on the first complaint against them, Rs50,000 on the second and by the third they will be blocked forever with their collateral (security deposits) with banks confiscated.

When verification complaints go up the ladder, the agent said that they hand over the installments to beneficiaries who leave without any investigation. Sometimes a PoS’s ID is blocked but this punishment or fine pales in comparison to how much they have earned to begin with: If you siphon off Rs5,000 for just 500 people you make Rs2.5 million. The collateral with banks is  a mere Rs150,000.

This is a practice among corrupt PoS agents that one of the officials who oversees the Lyari operations of BISP, Fahad Baloch, confirmed. “We know all this but we are short-staffed and if we raised the issue, the tranche would be deferred and the beneficiaries would suffer.”

He said that part of the problem is that the women are illiterate and do not get to see the screen where the transaction shows up. Only the shopkeepers see the desktop display of the computer monitor.

SAMAA Digital went to a PoS named Basharat PCO near Bakra Peeri, Lyari while the instalments were being disbursed. A source with the BISP said that a number of complaints had been lodged against Basharat and other PoS, including Geo Asif Communication, Malik Communication, Shahid Brothers. At least two of these IDs had been suspended with one bank only to be reactivated by another (UBL Omni and HBL Konnect). They have all since been suspended. 

A source in the BISP program claimed that he had once suspended the ID of a PoS operator in Lyari over repeated complaints. “The next thing I saw was that the shopkeeper [Bashir PCO] was dealing with the beneficiaries again as one of my seniors resumed his ID, overriding the complaints.”
The BISP previously outsourced to UBL Omni and Bank Alfalah among other banks across the country, but then it chose HBL Konnect to solely look after transactions countrywide.

Director Basharat said that the delay in the last tranche was linked to their investigations into HBL reactivating suspended PoS agents after complaints.

SAMAA Digital contacted both banks for comment. The former said that it was unaware of any such activities. The latter did not respond despite repeated attempts.