SBP grants in-principle approval to 5 digital retail banks

Karachi: The State Bank of Pakistan (SBP) on Wednesday has granted In-Principle Approval (IPA) for establishing five digital retails banks in a bid to foster innovation, financial inclusion and availability of affordable digital financial services.

According to a statement from the central bank, SBP Governor Jammel Ahmed granted "in-principle approvals" (IPAs) to the five planned digital banks at a historic ceremony at the SBP Museum Building in Karachi.

Moreover, SBP has issued NOCs to HugoBank Limited, KT Bank Pakistan Limited, Mashreq Bank Pakistan Limited, Raqami Islamic Digital Bank Limited and Telenor Microfinance Bank Limited in January 2023.

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.

The statement said that these firms have now been given in-principle approval to get operationally ready to start the digital financial services after meeting the requisite standards.

In his remarks at the event, SBP Governor emphasized the importance of the move to establish digital banks in Pakistan, the deep advantages it will bring to the financial system, and some of the major difficulties these types of financial players must overcome.

In addition, Jameel Ahmed outlined a few other crucial regulatory steps that would help create a digital financial ecosystem. 

He also reaffirmed that SBP is fully dedicated to helping all relevant parties create a promising, inventive, and technologically advanced future for banking in Pakistan.

He provided the financial community his word that SBP will work to make the country's financial sector more open, progressive, and attentive to the demands of its people.

He also expressed his hopes for how he believes digital banks can contribute to the growth of the digital ecosystem, nurture a new kind of customer experience, and offer credit access to underserved and unserved elements of society at cheap prices.

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.