SBP to issue up to five digital banking licences

KARACHI: State Bank of Pakistan (SBP) will grant up to five licences for digital banks, as it intends them to have strong value proposition, robust technological infrastructure, sufficient financial strength, technical expertise, and effective risk management culture, an official said on Friday.

Arshad Mehmood Bhatti, Executive Director, Banking Policy and Regulation Group, announced this at a webinar titled “Digital Banks - A New Era in Banking”, hosted by State Bank of Pakistan (SBP) and chaired by its Governor Dr Reza Baqir, according to a statement.

Earlier this month, the central bank unveiled a licensing and regulatory framework for digital banks. This event was part of SBP’s campaign to highlight the significance of that development in the regulatory ambit and create awareness about digital banks and the potential they offer for financial inclusion in the country.

SBP’s Bhatti, while underscoring the importance of digital banking, assured the market participants and potential investors that his team would remain available to provide necessary guidance in this regard.

The moot was also aimed at sharing details of digital banking framework with market participants and prospective investors and to address their queries.

Dr Reza Baqir, Governor SBP, highlighted the potential of digital financial services to become ubiquitous in the banking industry and its significance in terms of inclusion and innovation.

Discussing the prospects of digital banks in Pakistan, he emphasized that one of the key goals of the State Bank of Pakistan was to promote inclusion, innovation, and modernisation of the financial sector of Pakistan.

He emphasised SBP’s expectations from digital banks in promoting financial inclusion by providing affordable financial services to unserved and underserved segments of society, alongside fostering a new set of customer experience.

Baqir highlighted how digitisation of financial services was picking up pace, transforming the way banking was done for both individuals and businesses.

He mentioned that Pakistan’s journey for digital financial services started in early 2000s, and since then, a number of enabling regulatory initiatives had been launched, notably, branchless banking regulatory framework, electronic money institutions regulations, Roshan Digital Account, RAAST, Customers’ Digital Onboarding Framework, and Asaan Mobile Accounts etc.

He added that licensing and regulatory framework for digital banks was another milestone towards digital transformation and a major step towards revolutionising the country’s banking services industry.

The event also included a panel discussion moderated by Nadeem Hussain, founder Planet-N along with Muhammad Aurangzeb, Chairman Pakistan Banks’ Association, Tania Aidrus, former executive of Google and Special Assistant to PM, Qasif Shahid, CEO & Co-Founder of M/s Finja and Muhammad Akhtar Javed, Director Banking Policy and Regulations Department of SBP as panelists.

The panel touched upon the possible benefits and compelling reasons for existing banks and MFBs to apply for digital banks’ license and highlighted the relevant challenges faced by various digital banks across the globe.

The panelists were of the view that digital banks would offer a faster, cheaper and more efficient solution for meeting the financial requirements of unserved and underserved segments of the society, in particular and welcomed SBP’s landmark initiative.