KARACHI - The State Bank of Pakistan has directed all banks and Development Finance Institutions (DFIs) that they should not retain a part of insurance premium received from customers for payment to insurer. They may also not charge customers any amount in excess of their actual cost under various heads being paid to the service providers. According to a Circular issued Thursday by the State Bank, Banks/DFIs should clearly disclose all charges recoverable from the customers at the time of entering into agreement with them and the same shall also be duly incorporated in their schedule of charges. All banks/DFIs are advised to ensure strict compliance of the above instructions in letter and spirit as non-compliance will attract punitive action under BCO, 1962, the Circular added. It may be recalled that the State Bank in August 2006 had instructed the banks/DFIs not to charge any amount under the head of insurance premium without the consent of customer in writing. They were also advised that all charges, other than mark-up to be recoverable by them, should be clearly disclosed to customers at the time of entering into agreement. However, it has been observed that some banks/DFIs were not properly complying with these instructions. Therefore, the new instructions as mentioned above have been issued, which will become operational with immediate effect.