Karachi, September 20, 2023 – The State Bank of Pakistan (SBP) has granted In-Principle Approval (IPA) for the establishment of five digital retail banks (DRBs), signaling a significant step in the country’s financial landscape.
The five entities granted approval include:
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HugoBank Limited
KT Bank Pakistan Limited
Mashreq Bank Pakistan Limited
Raqami Islamic Digital Bank Limited
Telenor Microfinance Bank Limited
The SBP had issued No Objection Certificates (NOCs) to these five successful applicants for the establishment of digital banks in Pakistan in January 2023. After fulfilling the necessary requirements, these entities have now received in-principle approval to prepare for the operational launch of digital financial services.
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In a momentous ceremony held at the SBP Museum Building in Karachi, Governor of SBP, Jameel Ahmad, awarded IPAs to the five proposed digital banks. The event was attended by sponsors of the proposed DRBs, CEOs of incumbent banks, Payment System Operators (PSOs)/Payment System Providers (PSPs), Electronic Money Institutions (EMIs), Fintechs, and SBP’s top management.
Governor Jameel Ahmad emphasized the significance of introducing DRBs in Pakistan, highlighting their potential benefits to the financial system. He also discussed some of the key challenges faced by digital banks. He assured the financial community of SBP’s commitment to making the financial system more inclusive, innovative, and responsive to the needs of the citizens of Pakistan.
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Dr. Inayat Hussain, Deputy Governor of SBP, welcomed the participants and explained that these IPAs would enable the proposed DRBs to proceed further in achieving operational readiness across various functions, including governance, risk management, capital requirements, compliance, audit, consumer protection, business continuity, cybersecurity, product development, and technological infrastructure deployment.
The sponsors of the proposed DRBs expressed their gratitude for SBP’s framework for digital banks, which served as a comprehensive guide throughout the establishment process. They emphasized the investment opportunities in Pakistan and the role digital banks can play in offering faster, cheaper, and more efficient financial solutions to underserved segments of society. They believe that digital banks will enhance market efficiencies, provide access to a broader range of financial services, and contribute to the broader agenda of financial inclusion.
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Earlier this year, SBP issued “No Objection Certificates (NOCs)” to the proposed DRBs, allowing them to incorporate as Public Limited Companies with the Securities and Exchange Commission of Pakistan (SECP). These institutions were selected after a rigorous evaluation process based on parameters such as fitness and propriety, experience, financial strength, business plan, implementation plan, funding and capital plan, IT and cybersecurity strategy, and outsourcing arrangements.
Upon achieving operational readiness, these institutions will need to seek SBP’s approval to commence their operations, marking a transformative phase in Pakistan’s financial sector.
