The State Bank of Pakistan (SBP) on Friday said that it has issued no-objection certificates (NOC) to five applicants for establishing digital banks in the country.
Easy Paisa DB (Telenor Pakistan B.V & Ali Pay Holding Ltd.), Hugo Bank (Getz Bros & Co., Atlas Consolidated Pte. Ltd. and M & P Pakistan Pvt. Ltd.), KT Bank (Kuda Technologies Ltd., Fatima Fertilizer Ltd. and City School Pvt. Ltd.), Mashreq Bank (Mashreq Bank UAE) and Raqami (Kuwait Investment Authority through – PKIC and Enertech Holding Co) are among the companies that have received the NOCs.
A digital bank is defined as a bank that offers all kinds of financial products and services primarily through digital platforms or electronic channels instead of physical branches. The framework mainly aims to enhance financial inclusion through affordable and cost-effective digital financial services and is part of SBP’s comprehensive efforts to promote digital financial services in Pakistan. The framework includes guidance regarding licensing requirements, potential sponsors, and permissible use-cases during different phases. It also sets an expectation from applicants to have sound digital governance, robust, secure, and resilient technology infrastructure, effective data management strategy and practices.
In January 2022, the SBP introduced a licensing and regulatory framework for digital banks.
“The Framework was the first step towards introducing full-fledged digital banks in Pakistan. The digital banks are expected to provide all the banking services through digital means without any need for their customers to visit the bank branches physically,” said the SBP.
In response to SBP’s Licensing and Regulatory Framework for digital banks, the central bank received twenty (20) applications from a diverse range of interested players such as commercial banks, microfinance banks, electronic money institutions and Fintech firms by March 31, 2022.
“Further, a number of foreign players including venture capital firms already operating in the digital banking space also expressed their interest to venture into Pakistani market directly or in collaboration with local partners. The five (05) applicants were selected after a thorough and rigorous assessment process as per the requirements of the Framework.
The SBP stated that it anticipates that once they begin operating, these digital banks will promote financial inclusion by giving credit access to underserved and unserved elements of society through the provision of affordable/cost-effective digital financial services.
