The State Bank of Pakistan (SBP) has issued no-objection certificates to five applicants for establishing digital banks in Pakistan.
In January 2022, the central bank introduced a licensing and regulatory framework for digital banks in line with international best practices and decided to issue up to five digital bank licenses.
According to a statement issued by the central bank, applicants who have been issued no-objection certificates include:
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)
Raqami (Kuwait Investment Authority through – PKIC and Enertech Holding Co.)
The Digital Banking Regulatory Framework was the first step towards introducing full digital banking in Pakistan. Digital banks are expected to provide all banking services through digital means without the need for their customers to physically visit bank branches.
In response to SBP’s Licensing and Regulatory Framework for Digital Banks, it received twenty applications from a wide range of stakeholders including commercial banks, microfinance banks, e-money institutions and fintech companies by March 31, 2022.
Additionally, several foreign players, including venture capital firms already active in the digital banking space, have also expressed interest in engaging in the Pakistani market directly or in collaboration with local partners.
The five candidates were selected after a thorough and rigorous evaluation process in accordance with the requirements of the Framework. Applicants were evaluated on various parameters and all applicants were given the opportunity to present their business case to SBP.
Henceforth, each of these five applicants will incorporate a limited company with the Securities and Exchange Commission of Pakistan (SEC). They will then approach SBP for Authority Approval to demonstrate operational readiness and to commence operations under the pilot phase. Then they will start their operations commercially after getting the approval of SBP.
SBP expects that once operational, these digital banks will promote financial inclusion by providing affordable and cost-effective digital financial services, including credit access to unserved and underserved sections of the society.