Digital Banking in Pakistan enters new Era with SBP measures

Digital Banking in Pakistan enters new Era with SBP measures

The State Bank of Pakistan (SBP) is poised to grant preliminary approvals in the coming weeks to five newly established financial firms, paving the way for the establishment of Digital Banks in Pakistan. These institutions, including Easypaisa DB, Hugo Bank, KT Bank, Mashreq Bank, and Raqami, will receive their initial licenses from the central bank.

This significant development is expected to occur around September 20, as revealed by industry insiders who spoke to ProPakistani.

These selected companies were issued No-Objection Certificates back in January 2023, accompanied by instructions to establish their corporate presence and hire staff within the country.

The selection process for these entities was meticulous and rigorous, evaluating various criteria such as the financial stability of their sponsors, business plans, implementation strategies, funding and capital arrangements, IT and cybersecurity measures, and outsourcing arrangements, among others. These companies also presented their business cases to the banking regulator.

Moving forward, these entities will embark on a one-year journey to streamline their operations, preparing for the pilot and commercial launch of a diverse range of financial services in accordance with their granted licenses. Among the five entities, three will establish full-fledged Digital Banks, while the other two will focus on Digital Retail Banking.

Estimates suggest that these digital financial institutions will attract approximately Rs. 50 billion in investments from both foreign and local sponsors, enabling them to meet the requirements for paid-up capital, operational infrastructure, and human resources. This influx of capital is expected to drive innovation and competition in Pakistan's banking sector, fostering greater access to digital financial services for the nation's populace