SBP develops digital bank regulatory framework draft for public consultation


State Bank of Pakistan has developed a digital bank draft regulatory framework for public consultation, which has been shared with the industry and placed on the SBP’s website.

It is the outcome of an extensive study of international regulatory and industry best practices across several key themes in over 15 countries where digital banks or similar institutions operate in some form, said SBP statement issued here on Friday.

A digital bank serves customers primarily through digital/electronic channels without having brick and mortar branches like traditional banks.

SBP’s goal is to provide an appropriate framework for the operation of Digital Banks in Pakistan.

This initiative is part of the SBP’s comprehensive efforts to promote digital financial services in Pakistan including, Roshan Digital Accounts.

The proposed Framework entails Guidelines for Licensing, and Supplementary Regulations for Digital Banks.

It sets out different types of digital bank licenses, constitution models, minimum eligibility criteria and competencies for sponsors; directors; and Chief Executive Officers.

This indigenous regulatory framework is designed to enable the industry exploit market demand and opportunities without compromising the safety and soundness of the financial system.

Moreover, it also provides for investor-friendly, first-of-its-kind flexible requirements in Pakistan.

It merits mentioning here that Digital financial services in Pakistan are undergoing a progressive transformation journey, propelled by deep-rooted reforms and other enabling adjustments, instituted by SBP.

Recent initiatives in this regard entail introduction of Electronic Money Institutions, National Payment System Strategy (NPSS), instant payment system (RAAST), and Roshan Digital Account etc.

SBP initiated working on introduction of a separate framework for digital banks along the lines of regional regulatory trends with the key objectives to explore further avenues for financial inclusion, credit access to un-served and un-derserved.—APP