In a move to drive financial inclusion and expand access to affordable digital financial services, the State Bank of Pakistan (SBP) has issued In-Principle Approval (IPA) to establish five digital retail banks. These pioneering institutions include HugoBank Limited, KT Bank Pakistan Limited, Mashreq Bank Pakistan Limited, Raqami Islamic Digital Bank Limited, and Telenor Microfinance Bank Limited.
Earlier in January 2023, SBP had granted No Objection Certificates (NOCs) to these five successful applicants for the establishment of digital banks in the country. Following the fulfilment of necessary requirements, these entities have now received in-principle approval to begin preparations for the operational launch of digital financial services.
In a ceremony held at the SBP Museum Building in Karachi, on Wednesday, SBP Governor, Jameel Ahmad, officially awarded IPAs to the five proposed digital banks. During his keynote address, the SBP governor emphasised the significance of introducing Digital Retail Banks (DRBs) in Pakistan and the profound benefits they bring to the financial system. He acknowledged the challenges faced by such innovative financial players and highlighted SBP’s commitment to support stakeholders in building a digitally empowered future for banking in Pakistan.
Jameel assured the financial community of SBP’s dedication to making the financial system more inclusive, innovative, and responsive to the needs of Pakistani citizens. He expressed his expectation that digital banks would create a digital ecosystem, enhance customer experiences, and provide affordable digital financial services, including credit access to underserved segments of society.
SBP Deputy Governor, Dr Inayat Hussain welcomed the participants and explained that the IPAs would enable proposed DRBs to achieve operational readiness in various functions, including governance, risk management, compliance, consumer protection, cybersecurity, product development, technological infrastructure, and relevant policies.
Sponsors of the proposed DRBs commended SBP’s initiative and emphasised that digital banks would offer a faster, more cost-effective, and efficient solution to meet the financial needs of underserved populations in Pakistan. They expressed confidence that digital banks would become an integral part of the financial ecosystem, advancing the broader agenda of financial inclusion.
Published in The Express Tribune, September 21st, 2023.
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