Pakistan to get five digital retail banks

KARACHI: The State Bank of Pakistan (SBP) on Wednesday awarded ‘in-principle approvals’ (IPA) to five digital retail banks in a bid to foster “innovation, financial inclusion and availability of affordable digital financial services”, ARY News reported.

SBP Governor Jammel Ahmed awarded ‘in-principle approvals’ (IPAs) to the five proposed digital banks in a momentous ceremony at SBP Museum Building in Karachi, according to a statement issued by the central bank.

This event was attended by sponsors of proposed DRBs, CEOs of incumbent banks, Payment System Operators (PSOs)/ Payment System Providers (PSPs), Electronic Money Institutions (EMIs), Fintechs and the central bank’s top management.

After the fulfillment of the necessary requirements, the statement noted, these entities have now been granted in-principle approval to prepare themselves operationally to launch the digital financial services.

Addressing the ceremony, SBP Governor highlighted the significance of the initiative of introducing digital banks in Pakistan, its profound benefits to the financial system and some of the key challenges faced by such genre of financial players.

Jameel Ahmed also mentioned a few other important regulatory initiatives in support of building a digital financial ecosystem and assured that SBP is fully committed to support various stakeholders for a bright, innovative, and digitally empowered future of banking in Pakistan.

He assured the financial fraternity of SBPs commitment to make financial system more inclusive, more innovative, and more responsive to the needs of the citizens of Pakistan.

He also shared his expectations that post operational commencement, digital banks will help developing a digital ecosystem, foster a new set of customer experience, provide affordable digital financial services including credit access to unserved and underserved segments of the society.

Ahmad further said that as a principle, the SBP decided not to grant licenses to the existing banks. “This was done to encourage the entrance of new entrants in this market,” he added.

“I hope that the emergence of digital banks has the potential to create more jobs in the economy, especially in areas such as technology, customer support and data analysis,” he said.

Earlier this year, SBP issued “No Objection Certificate (NOC)” to the proposed digital retail banks, allowing them to incorporate as a Public Limited Company with Securities and Exchange Commission of Pakistan (SECP).