SBP grants preliminary approval to five digital banks

KARACHI: The central bank has given preliminary approval to five digital retail banks to start offering online financial services in the country, Jameel Ahmad, the governor of the State Bank of Pakistan (SBP), said on Wednesday.

The five banks are HugoBank Limited, KT Bank Pakistan Limited, Mashreq Bank Pakistan Limited, Raqami Islamic Digital Bank Limited and Telenor Microfinance Bank Limited. They received no-objection certificates from the central bank in January 2023 to register as public limited companies with the Securities and Exchange Commission of Pakistan.

The banks were selected after a thorough and rigorous evaluation process based on various criteria, including their financial strength, business plan, IT and cybersecurity strategy, and outsourcing arrangements, governor Ahmad said at an event where he awarded the approvals to the five proposed digital banks.

Upon attaining operational readiness, these institutions will be required to seek approval from the SBP for the commencement of their operations. “These entities are now ready to move on to the next phase, which involves getting them prepared for the launch of the pilot project,” he said. “In order to support each of them in launching successfully and ultimately achieving full operations, the SBP will work closely with each of them.”

Speaking at the keynote address, governor Ahmad said SBP was fully committed to supporting various stakeholders for a bright, innovative, and digitally empowered future of banking in Pakistan.

He said digital banks would help develop a digital eco-system, foster a new set of customer experiences, and provide affordable digital financial services including credit access to those who lack access to formal banking channels.

The governor also mentioned some of the key challenges faced by such a genre of financial players, such as cybersecurity, customer protection, and regulatory compliance. He said the SBP had taken several important regulatory initiatives in support of building a digital financial ecosystem, such as issuing guidelines for digital banks, enabling open banking, and facilitating fintechs.

Ahmad assured the financial fraternity of SBP’s commitment to make the financial system more inclusive, more innovative, and more responsive to the needs of the citizens of Pakistan.