State Bank of Pakistan (SBP) has launched licensing and regulatory framework for setting up digital banks in Pakistan as a separate and distinct category in the banking business. Digital bank is defined as a bank which offers all kinds of financial products and services primarily through digital platforms or electronic channels instead of physical branches.
 | Promote financial inclusion |
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Provide affordable/cost effective digital financial services |
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Encourage application of financial technology and innovation in banking |
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Foster new set of customer experience |
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Further develop digital eco-system |
Under this framework, SBP may grant two types of digital bank licenses: 1) Digital Retail Bank (DRB); and, 2) Digital Full Bank (DFB). DRBs will primarily focus on retail customers and DFBs can deal with retail customers as well as business and corporate entities. Minimum capital requirement for DRBs is set at PKR 1.5 billion during the pilot phase that will gradually increase to PKR 4 billion over a transition period of three years. Subsequent to completion of transition phase, DRBs may graduate to receive license of a DFB subject to fulfillment of applicable minimum capital requirement and completion of a two-years progression phase.
This framework is primarily designed for setting-up of a new digital bank. However, based on a viable business case and satisfactory Digital Financial Services (DFS) experience, traditional banks/Micro Finance Banks (MFBs) may request SBP for conversion of their institution into a digital bank.
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Applications will be accepted until March 31, 2022. |
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SBP has decided to initially limit the number of digital banks’ license up to five (05). |
Clarifications may be sent at: [email protected]
The digital bank’s license requests may be submitted at : [email protected]
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The following will be eligible to form and seek a license for a proposed digital bank:
| A traditional bank having minimum one-year experience of delivering Digital Financial Services (DFS) in the retail customer segments, may apply either individually or with other equity participants. However, SBP may advise an extended period of experience if the traditional bank’s performance is not considered satisfactory by SBP. |
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An international bank or international DFS entity having a successful track record of a minimum of three years of delivering DFS in the retail customer segments, may apply either individually or with other equity participants. |
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An Electronic Money Institution (EMI) seeking conversion into a digital bank having minimum one-year experience of delivering DFS in the retail customer segments. However, SBP may advise an extended period of experience if the EMI’s performance is not considered satisfactory by SBP. Further, pilot phase operation period of an EMI may be counted towards one year operations requirement for an EMI seeking to transform into a digital bank. |
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Those holding majority stake in or exercising control over a MFB, EMI, international bank or international DFS entity having a successful track record of a minimum of three years of delivering DFS in the retail customer segments, may apply either individually or with other equity participants. |
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Any other person having a minimum of three years of experience in the financial services, financial technology, telecommunication, merchant aggregation technology platforms, Information Communication Technology (ICT), or other pertinent digital or innovative financial and non-financial domains, when applying to form a digital bank with a minimum of 5% equity in the proposed digital bank , either individually or preferably with at least one of the individuals or entities, as the case may be, listed in sub-clause (a), (b) and (d) being a minimum 5% equity participant in the proposed digital bank. |