Karandaaz sign agreement to assist SBP on digital banks

ISLAMABAD: Not-for-profit financial institution Karandaaz Pakistan on Monday agreed to provide technical assistance to the central bank for formulating legal and regulatory framework for digital banks in the country.

“State Bank of Pakistan and Karandaaz signed an agreement under which Karandaaz will support State Bank’s efforts to create an enabling environment based on international best practices for digital banks,” the State bank of Pakistan said in a statement.

The agreement was signed by Syed Irfan Ali, executive director of SBP and Ali Sarfraz, chief executive officer of Karandaaz. The technical assistance will include extensive review of existing laws, rules and regulations and international best practices on regulatory frameworks for digital banks.

Sarfraz of Karandaaz said extensive consultations will be held with the industry players “for developing a robust and conducive regulatory regime for digital banks”. The statement said the banking sector and market players at present need regulatory direction to offer services as standalone digital banks.

The SBP is already working to introduce a separate category of banking services through promulgation of a framework for digital banks in Pakistan. The output of this engagement will be comprehensive recommendations for formulation of the regulatory framework, including licensing criteria and any amendments required in existing legal frameworks for the advent of digital banks in Pakistan.

Ali of SBP said over 90 percent of the population has access to most affordable ICT services in the world and the consumers’ use of electronic payments in Pakistan has grown significantly in recent years.

“This trend will accelerate in coming years due to the vision of State Bank of Pakistan on provision of digital financial services, especially to financially excluded segment of population,” he added.