One of the key goals of the State Bank of Pakistan (SBP) is to promote inclusion, innovation and modernisation of the financial sector, remarked SBP Governor Dr Reza Baqir.

Speaking at a webinar titled “Licensing and Regulatory Framework for Digital Banks” on Friday, the governor emphasised that the State Bank expected digital banks to promote financial inclusion by providing affordable financial services to the unserved and underserved segments of society.

Moreover, he hoped that such institutions would also foster a new set of customer experience.

He talked about how digitisation of financial services was gathering pace and transforming the way banking was done by both individuals and businesses.

“Pakistan’s journey towards digital financial services started in the early 2000s, and since then a number of enabling regulatory initiatives have been taken,” he said.

The most notable initiatives were Branchless Banking Regulatory Framework, Electronic Money Institutions Regulations, Roshan Digital Account, RAAST, Customers’ Digital Onboarding Framework and Asaan Mobile Accounts.

The Licensing and Regulatory Framework for Digital Banks was another milestone in the road to digital transformation and a major step aimed at revolutionising the banking services industry, Baqir stressed.

Read SBP praised for Islamic banking initiatives

Speaking on the occasion, SBP Banking Policy and Regulation Group Executive Director Arshad Mehmood Bhatti informed the audience that the central bank would grant up to five digital banking licences.

He elaborated that the central bank intended to introduce digital banks with strong value proposition, robust technological infrastructure, sufficient financial strength, technical expertise and an effective risk management culture.

He assured market players and potential investors that his team would remain available to provide necessary guidance.

On the occasion, the panel discussion touched upon the possible benefits and compelling reasons for existing banks and microfinance banks to apply for digital banking licences and highlighted the relevant challenges faced by various digital banks across the globe.

The panelists held the view that digital banks would offer faster, cheaper and more efficient solutions for meeting the financial requirements of unserved and underserved segments of society.

Published in The Express Tribune, January 22nd, 2022.

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