SBP prepares Digital Bank Regulatory Framework

Shares draft with industry for stakeholder feedback

KARACHI:

The State Bank of Pakistan (SBP) has developed a draft of the Digital Bank Regulatory Framework for public consultation.

According to a statement issued on Friday, the central bank has shared the proposed framework with the industry and placed it on the SBP’s website for feedback.

“It is the outcome of an extensive study of best international regulatory and industrial practices across several key themes in over 15 countries where digital banks or similar institutions operate in some form,” it said.

It elaborated that a digital bank served customers primarily through digital/ electronic channels without having brick and mortar branches like traditional banks.

“The SBP’s goal is to provide an appropriate framework for the operation of digital banks in Pakistan.”

According to the statement, the initiative is part of the SBP’s comprehensive efforts to promote digital financial services including the Roshan Digital Account, Raast payment system and Electronic Money Institution (EMI) licences and operations.

The proposed framework entails guidelines for licensing and supplementary regulations for digital banks.

The framework sets out different types of digital bank licences, constitution models, minimum eligibility criteria and competencies for sponsors, directors and CEOs.

“The indigenous regulatory framework is designed to enable the industry to exploit market demand and opportunities without compromising on the safety and soundness of the financial system,” it said. “Moreover, it also provides for investor-friendly flexible requirements.”

The digital financial services in Pakistan are undergoing a progressive transformation, propelled by deep-rooted reforms and other enabling adjustments, instituted by the SBP, it said.