On Friday, the State Bank of Pakistan (SBP) announced that it has given NOCs to five applicants for the establishment of digital banks in the country.
Easy Paisa DB (Ali Pay Holding Ltd. and Telenor Pakistan B.V. ), Hugo Bank (Atlas Consolidated Pte. Ltd., Getz Bros & Co., and M & P Pakistan Pvt. Ltd.), KT Bank (Fatima Fertilizer Ltd., Kuda Technologies Ltd., and City School Pvt. Ltd.), and Mashreq Bank (Mashreq Bank
A “digital bank” is a bank that provides all sorts of financial goods and services primarily through digital platforms or electronic channels rather than physical branches. The framework, which is part of the SBP’s broad measures to promote digital financial services in Pakistan, aims to expand financial inclusion by providing accessible and cost-effective digital financial services. At various levels, the framework provides guidance on licence criteria, possible sponsors, and acceptable use-cases. It also creates a benchmark for applicants’ excellent digital governance, powerful, secure, and resilient IT infrastructure, and effective data management procedures.
In January 2022, the SBP launched a licence and regulatory framework for virtual banks.
The Framework was the first step towards delivering fully operational digital banking to Pakistan. According to the SBP, digital banks must provide all banking services digitally, eliminating the need for customers to physically visit bank branches.
By March 31, 2022, the central bank had received twenty (20) applications from a wide range of interested parties in response to the SBP’s licencing and regulatory framework for digital banks, including commercial banks, microfinance banks, electronic money institutions, and Fintech enterprises.
Additionally, a number of overseas companies, especially venture capital firms operating in the digital banking industry, showed a willingness to enter the Pakistani market either directly or through collaborations with local entrepreneurs. The five (05) applications were chosen after a thorough and stringent review approach in compliance with the Framework’s requirements.
According to the SBP, once operational, these digital banks would promote financial inclusion by providing credit to underserved and unserved parts of society through the provision of reasonable/low-cost digital financial services.