Adapting innovation, the State Bank of Pakistan (SBP) has drafted a legal framework for establishing digital banks that can deal in retail banking. Digital banks will not be required to have physical branches to run their business. [Read Legal Framework here]

“For customers, access points are primarily digital and electronic channels,” a press release of the central bank stated. “However, Digital Bank may use sales and service centres, branchless banking agents, other banks’ branches for branding, customer complaints, and cash transactions.”

Minimum Capital Requirement (MCR) for a Digitial Retail Bank (DRB) is set at Rs1.5 billion for the pilot stage and Rs2 bn at commercial launch. “Whereas total MCR is Rs4 bn with remaining Rs2 bn to be met gradually over the transition period.”

The central bank suggested that sponsors should pursue a collaborative investment model to promote a complementing set of non-bank innovative players. The legal framework also includes Digital Full Bank (DFB). DRB will be required to complete the transition from obtaining a license to become operational in three years while two years are being proposed for DFB. The proposed framework also provides an option for an Electronic Monetary Institutions (EMIs) to transform into a DRB.

The SBP stated that digital financial services in Pakistan are undergoing a progressive transformation journey, propelled by deep-rooted reforms and other enabling adjustments.

“Recent initiatives in this regard entail the introduction of EMIs, National Payment System Strategy (NPSS), instant payment system (RAAST), and Roshan Digital Account (RDA).” The SBP has invited feedback on the legal framework by April 25, 2021.


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