State Bank of Pakistan issuance license for Digital banks in Pakistan

State Bank of Pakistan issuance license for Digital banks in Pakistan

The State Bank of Pakistan announced the granting of licenses for digital banks in the country, as well as the appropriate laws for them.

State Bank of Pakistan issuance license for Digital banks in Pakistan

According to Pakistan's Central Bank, this is the first step toward the establishment of a fully digital bank that would offer all banking services, including digital account opening, deposit, and lending.

Digital Bank, according to the State Bank of Pakistan, is the culmination of the banking industry's multi-year digital journey. Initially, five licenses for digital banks will be issued, and applications will be accepted until March 31, 2022.

State Bank of Pakistan issuance license for Digital banks in Pakistan

The new framework of digital banking will enable the country to adapt to the modern requirements of banking as well as provide better services to the consumer.

How will digital banking differ from ordinary banks?

Digital banks introduced in Pakistan will provide all services to the customer like traditional banks, however, the customer will not have to go to the bank branch for this purpose.

Digital Bank will provide other services to the customer including opening an account through digital platforms or electronic means without calling a bank branch.

According to SBP, customers using the new digital bank services will no longer have to go to the bank branch in person.

State Bank of Pakistan issuance license for Digital banks in Pakistan

Types and services of digital banking

Under the new framework, SBP will issue licenses to two types of digital banks. The first type will be Digital Retail Bank (DRB) and the second will be Digital Full Bank (DFB).

The digital retail bank will primarily provide services to retail customers, while the digital full bank can work with retail customers as well as businesses and corporations.

State Bank of Pakistan issuance license for Digital banks in Pakistan

According to the SBP framework, digital banks are required to establish a regular place of business in Pakistan for management, staff, and other support operations, which is an important point of contact for various stakeholders, including the central bank and other regulators. Will work as

The capital required for a digital bank will also be less than the capital required for existing bank branches, so new technology-savvy entrepreneurs will also be able to come to this new type of bank.

State Bank of Pakistan issuance license for Digital banks in Pakistan

According to the SBP, the minimum capital required for the establishment of DRB in the pilot phase will be Rs 1.5 billion, which will be gradually increased to Rs 4 billion over a period of three years. The DRB will be licensed upon completion of the transitional phase. This will require the Digital Retailer Bank to complete the phased growth phase with minimum capital requirements.

State Bank of Pakistan issuance license for Digital banks in Pakistan

According to the details released by SBP, both interest and Islamic types of digital banks can be licensed. While interest banking institutions can also provide Islamic banking services under DRB and DFB Islamic Banking Windows.