SBP issues NOCs to five applicants for establishing digital bank

The State Bank of Pakistan (SBP) said that it has issued no-objection certificates (NOC) to five applicants for establishing digital banks in the country.

The following are the ones issued the NOC: I) Easy Paisa DB (Telenor Pakistan B.V & Ali Pay Holding Ltd.); II) Hugo Bank (Getz Bros & Co., Atlas Consolidated Pte. Ltd. and M & P Pakistan Pvt. Ltd.); III) KT Bank (Kuda Technologies Ltd., Fatima Fertilizer Ltd. and City School Pvt. Ltd.); IV) Mashreq Bank (Mashreq Bank UAE); and V) Raqami (Kuwait Investment Authority through - PKIC and Enertech Holding Co.).

In January 2022, the SBP introduced a licensing and regulatory framework for digital banks. "The Framework was the first step towards introducing full-fledged digital banks in Pakistan. The digital banks are expected to provide all the banking services through digital means without any need for their customers to visit the bank branches physically," said the SBP.

In response to SBP's Licensing and Regulatory Framework for digital banks, the central bank received twenty (20) applications from a diverse range of interested players such as commercial banks, microfinance banks, electronic money institutions and Fintech firms by March 31, 2022.

"Further, a number of foreign players including venture capital firms already operating in the digital banking space also expressed their interest to venture into Pakistani market directly or in collaboration with local partners. The five (05) applicants were selected after a thorough and rigorous assessment process as per the requirements of the Framework.

The five (05) applicants were selected after a thorough and rigorous assessment process as per the requirements of the Framework. "Applicants were assessed on various parameters that included fitness and propriety, experience and financial strength; business plan; implementation plan; funding and capital plan; IT and cybersecurity strategy and outsourcing arrangements, etc. Further, all the applicants were given the opportunity to present their business case to SBP.

"Going forward, each of these five (05) applicants will incorporate a public limited company with Securities and Exchange Commission of Pakistan.