In a first, Pakistani central bank says will issue digital banking licenses this year

A brass plaque of the State Bank of Pakistan is seen outside of its wall in Karachi, Pakistan, on December 5, 2018. (REUTERS/File)
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Updated 04 January 2022
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In a first, Pakistani central bank says will issue digital banking licenses this year

  • Latest in series of initiatives by Pakistan to introduce new payment solutions to tap massive unbanked population
  • Digital bank give people access to banking wherever they are and wherever they have secure Wi-Fi and strong cell signal

KARACHI: The State Bank of Pakistan (SBP) has introduced a regulatory framework to issue licenses for digital banks in line with global practices, the central bank said this week, hoping the move will usher in a new era for the country's banking industry. 

A digital bank offers all kinds of financial products and services primarily through digital platforms or electronic channels, essentially giving people access to banking wherever they may be and wherever they have secure Wi-Fi and strong cell signal.

Introducing a regulatory framework for digital banks is the latest in a series of recent initiatives by the State Bank of Pakistan towards introducing new payment solutions in a country with a massive unbanked population.

"This is the first step towards introducing a completely digital bank that will provide all the banking services, from account opening to deposit and lending, through digital means and the customers will not need to visit any bank branch physically," the central bank said in a statement on Monday. "Digital banks are the culmination of the digital journey on which the banking industry embarked upon many years ago."

The newly issued licensing and regulatory framework provides details for setting up digital banks as a separate and distinct category in Pakistan.     

Under the framework, the SBP will grant two types of digital bank licenses:  Digital Retail Bank (DRB) and Digital Full Bank (DFB). DRBs will primarily focus on retail customers, while DFBs will deal with retail customers as well as businesses and corporate entities. 

"The framework mainly aims to enhance financial inclusion through affordable/cost effective digital financial services," the SBP said. "The framework includes guidance regarding licensing requirements, potential sponsors and permissible use-cases during different phases." 

The framework also sets an expectation for applicants to have sound digital governance, robust, secure and resilient technology infrastructure as well as effective data management strategy and practices.  

As per the framework, digital banks are required to maintain a principal place of business in Pakistan to house offices of its management, staff and support operations, which will serve as the main hub of contact for various stakeholders, including the SBP and other regulators. 

The state bank said licenses for DRBs and DFBs may be obtained for both conventional and Islamic variants, while conventional variants of DRBs and DFBs could also offer Islamic banking services through Islamic windows.

The central bank said setting up digital banks would also require less capital, compared to the brick-and-mortar banks currently in existence, and encourage new technology-oriented entrepreneurs to enter this new realm of business.  

The minimum capital requirement for DRBs during the pilot phase is Rs1.5 billion, which will gradually increase to Rs4 billion over a transition period of three years, according to the SBP.

Subsequent to the completion of the transition phase, DRBs may graduate to receive a DFB license, subject to the fulfillment of the minimum capital requirement and the completion of a two-year progression phase.  

Earlier, the SBP released an exposure draft of the regulatory framework and a targeted survey was launched to invite feedback from a wide range of local as well as international stakeholders. The framework covers all the essential guidance and supplementary regulations for a diverse range of possible applicants interested in setting up digital banks in Pakistan.    

"In line with international best practices and assessment of the overall banking situation in Pakistan, SBP has decided to initially issue up to five digital banks’ licenses, which essentially means that SBP is looking to attract players with strong value proposition, a robust technological infrastructure, sufficient financial strength, technical expertise and effective risk management culture," the central bank said.  

SBP will be accepting applications in for digital banking licenses till March 31, 2022.  Applicants may submit their requests along with all requisite documents at [email protected], according to the SBP statement. They may also approach the central bank for any clarification at [email protected]

Other recent SBP digitalization initiatives, which are gaining traction in Pakistan, include customer digital on-boarding, Roshan Digital Accounts, the Raast instant payment system, Electronic Money Institutions licenses and Asaan Mobile Accounts. 


Pakistan reviews measures to protect Chinese workers as visiting dignitary raises concerns

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Pakistan reviews measures to protect Chinese workers as visiting dignitary raises concerns

  • Liu Jianchao, a prominent Chinese minister, said this week Pakistan’s security challenges were undermining investor confidence
  • Killing of five Chinese nationals in suicide bombing in March has put the spotlight on the security of Chinese workers in Pakistan

ISLAMABAD: Interior Minister Mohsin Naqvi held a meeting on Saturday to review security measures for foreigners in Pakistan, particularly Chinese workers who have been the target of several recent militant attacks.

The killing of five Chinese nationals in a suicide bombing on their convoy in northwest Pakistan on March 26 has put the spotlight on the security of Chinese workers, many of whom work on road, infrastructure and development projects under the China-Pakistan Economic Corridor, a flagship of the Belt and Road scheme.

During a visit to Islamabad on Friday, Liu Jianchao, a prominent Chinese minister, said Pakistan’s security challenges were undermining investor confidence. The following day, Saturday, the Pakistani interior minister chaired a meeting to review the “overall security situation in the country.”

“The meeting reviewed the measures taken to protect foreigners, especially Chinese citizens,” the interior ministry said in a statement. “Naqvi directed strict adherence to the SOPs of the security plan … emphasized that the formulated plan should be regularly monitored at every level.”

The minister called on relevant security and intelligence agencies to keep “close coordination to thwart the nefarious designs of anti-national elements.”

“There is no room for negligence in the implementation of the security plan,” the statement quoted Naqvi as saying.

Addressing the 3rd Meeting of the Pakistan-China Joint Consultative Mechanism (JCM) in Islamabad on Friday, Liu said security threats were the “main hazards” to CPEC cooperation. 

“As people often say, confidence is more precious than gold. In the case of Pakistan, the primary factor shaking the confidence of Chinese investors is the security situation,” the official said in rare public comments by Beijing on Pakistan’s security challenges. “Without security, the business environment cannot really improve.”

The March 26 attack on the Chinese convoy en route to a hydropower project in Dasu was the third major one in a little over a week on China’s interests in Pakistan, where Beijing has pledged over $65 billion in energy, infrastructure and other projects as part of its wider Belt and Road initiative.

The Mar. 26 bombing followed a Mar. 20 attack on a strategic port used by China in the southwestern province of Balochistan, where Beijing has poured billions of dollars into infrastructure projects, including the deep-sea port of Gwadar, and a Mar. 25 assault on a naval air base, also in the southwest. Both attacks were claimed by the Baloch Liberation Army (BLA), the most prominent of several separatist groups in Balochistan.

Dasu, the site of a major dam, has been attacked in the past, with a bus blast in 2021 killing 13 people, nine Chinese among them, although no group claimed responsibility, like the Mar. 26 bombing.

Pakistan is home to twin insurgencies, one mounted by religiously-motivated militants and the other by ethnic separatists who seek secession, blaming the government’s inequitable division of natural resources in southwestern Balochistan province.

Chinese interests are mostly under attack primarily by ethnic militants seeking to push Beijing out of mineral-rich Balochistan.


Pakistan’s Sindh province suspends human milk bank, refers initiative to Islamic Ideology Council

Updated 22 June 2024
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Pakistan’s Sindh province suspends human milk bank, refers initiative to Islamic Ideology Council

  • Pakistan’s first human milk bank was set up earlier this month by Sindh Institute of Child Health and Neonatology
  • Facility was established in collaboration with UNICEF, described as “significant milestone in maternal health”

ISLAMABAD: The Sindh Institute of Child Health and Neonatology (SICHN) said this week Pakistan’s first human milk bank established earlier this month had been suspended pending further guidance from the Council of Islamic Ideology.

A human milk bank, breast milk bank or lactarium is a service that collects, screens, processes, pasteurizes, and dispenses by prescription human milk donated by nursing mothers who are not biologically related to the recipient infant. For women who are unable to breastfeed or produce enough milk, pasteurized donor breast milk can be an effective approach to feeding.

SICHN earlier this month announced its human milk bank facility, Pakistan’s first, established in collaboration with UNICEF, describing it as a “significant milestone in maternal health.”

“A recent revised fatwa issued by Darul Uloom Karachi dated 16ht June 2024 has prompted us to discontinue the functionality of the Human Milk Bank. This decision is in compliance with the updated religious guidance and reflects our ongoing commitment to operate within the framework of Islamic jurisprudence,” SICHN said in a statement dated June 21. 

“Moving forward, we will seek further guidance on this issue from both Darul Uloom Karachi and the Council of Islamic Ideology,” the statement added, referring to a religious body that advises the government on the compatibility of laws with Islam.

SICHN said the milk bank was initially set up after seeking and receiving a fatwa from the Darul Uloom Karachi, “which provided us with the necessary religious endorsement to proceed.” 

“This fatwa was critical in ensuring that our efforts were in harmony with Islamic teachings, providing reassurance to the community and stakeholders involved,” the institute said. 

The fatwa cited certain pre-conditions to establish the milk bank including that Muslim children should only be provided milk from Muslim mothers.

Iran is currently believed to be the only country in the Muslim world with a network of milk banks. In general, Islam makes the practice tricky. The opposition centers on a tenet called milk kinship, which states that a parent-child bond is formed when a woman gives milk to a baby who isn’t biologically related to her. 

To avoid future incestuous marriages between so-called milk siblings, the tenet says, the foster relationship must be clearly delineated. Since milk bank donors are typically anonymous and the donations are often combined, the practice is rejected in most of the Muslim world.


Pakistani PM vows to continue ‘war against terrorism’ as five soldiers killed in IED blast 

Updated 22 June 2024
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Pakistani PM vows to continue ‘war against terrorism’ as five soldiers killed in IED blast 

  • IED blast targeted vehicle carrying security forces in Kurram district in Pakistan’s Khyber Pakhtunkhwa
  • 65 police officials killed, 86 wounded in 237 incidents of terrorism in the province in the past five months

ISLAMABAD: Prime Minister Shehbaz Sharif said on Friday his government would continue its “war on terrorism” as five Pakistani soldiers were killed in an improvised explosive device (IED) blast in northwestern Pakistan.

The IED blast targeted a vehicle carrying security forces personnel in Kurram district in Pakistan’s Khyber Pakhtunkhwa (KP) province, the Pakistan army’s media wing said in a statement, amid a rise in terror attacks mostly by the Pakistani Taliban, known as Tehrik-e-Taliban Pakistan or TTP, an ally of the Afghan Taliban but a separate group, which has stepped up its assaults in the region since the Taliban seized power in Afghanistan in 2021. Pakistan says the TTP uses Afghan soil for attacks in Pakistan, a charge that Kabul denies. 

“The entire nation pays tribute to the martyrs and stands united against terrorism,” Sharif said after the latest attack, vowing to “continue the war against the menace till its complete elimination.”

Pakistan has witnessed a surge in militant attacks in recent years, predominantly in Khyber Pakhtunkhwa. In January 2023 militants killed at least 101 people, mostly police officers, when a suicide bomber disguised as a policeman attacked a mosque in the northwestern city of Peshawar.

Earlier this month, the counter-terrorism department (CTD) of police in Peshawar issued a report, saying 65 police officials were killed while another 86 were wounded in 237 incidents of terrorism in the province in the past five months. It said police had killed 117 militants and arrested 299 others in a series of operations.

Pakistani authorities often say Afghanistan’s Taliban rulers are giving shelter to TTP fighters across the unruly border. The Afghan Taliban government insists it doesn’t allow anyone to use Afghan soil for violence in any country. The TTP has also said it was not using Afghan soil for targeting troops in Pakistan.
 


Pakistan police hunt mob that lynched local tourist accused of blasphemy

Updated 22 June 2024
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Pakistan police hunt mob that lynched local tourist accused of blasphemy

  • A mob beat the man to death on Thursday night after accusing him of burning pages of the Qur’an
  • Lynchings are common in Islamic republic of Pakistan, where blasphemy can legally carry the death penalty

PESHAWAR: Pakistani authorities have begun an investigation to identify and arrest members of a mob that killed a local tourist accused of blasphemy, after they ransacked a police station holding him in protective custody, officials said on Friday.
A mob beat the man to death on Thursday night after accusing him of burning pages of the Qur’an. They set the police station in the country’s northwest ablaze and injured eight policemen, Malankand division’s regional police chief Mohammad Ali Gandapur told Reuters.
“After initially rescuing the man from a crowd, the police took him to the station in Madyan, but announcements from mosque loud speakers asked locals to come out,” Gandapur said, after which the mob stormed the station.
Lynchings are common in Pakistan, an Islamic republic where blasphemy can legally carry the death penalty.
Legal processes are frequently preceded by vigilante action based on rumors or complaints. 
Graphic videos of the latest incident, verified to Reuters by the police, showed a frenzied mob dragging a naked and bloodied body through the streets, and then setting it on fire. The footage went viral on social media and sparked outcry among Pakistani users.
Gandapur said the situation was under control and a case registered against the organizers of the mob. He added the man had been visiting the Swat Valley, a popular tourist destination, for the Muslim holiday of Eid-al-Adha.
Last month, a Christian man in his seventies was attacked by a mob on charges of burning pages of the Qur’an and later died of his injuries in eastern Pakistan.
In 2021, a Sri Lankan factory manager was lynched in one of the highest profile incidents in the country. Six people were sentenced to death for their part in the lynching after the incident sparked global outcry.


Pakistani court orders police to take action against smoke emitting vehicles in Lahore

Updated 22 June 2024
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Pakistani court orders police to take action against smoke emitting vehicles in Lahore

  • Lahore consistently ranks among world’ most polluted cities every winter when heavy fog envelopes the city
  • Lahore High Court orders police to take action against people who burn crop residue and cause pollution

ISLAMABAD: The Lahore High Court (LHC) this week directed traffic police officials to impound vehicles emitting smoke and take stern action against people found burning crop residue in Pakistan’s eastern city of Lahore, state-run media reported, in an attempt to curb pollution in the city. 

Lahore consistently ranks among the world’s most polluted cities every year during the winter season. Last year, toxic smog sickened tens of thousands of people during the winter season, with the thick smog causing flight cancelations and forcing authorities to close schools. The situation got so worse that in a first, Pakistani authorities deployed artificial rain in December 2023 to battle smog.

Lahore, capital of the Pakistan’s most populous Punjab province, is in an airshed, an area where pollutants from industry, transportation and other human activities get trapped because of local weather and topography so they cannot disperse easily. The Punjab government has also attributed pollution and smog to crop residue burnt frequently in neighboring India. 

“The Lahore High Court (LHC) on Friday once again ordered traffic police authorities to take strict action against smoky vehicles and impound them,” the state-run Associated Press of Pakistan (APP) said. 

Justice Shahid Karim passed the orders while hearing several identical petitions filed by citizens Haroon Farooq and others against the government’s ineffective measures to control smog. During the proceedings, the court observed that most incidents of crop residue burning took place in the vicinity of the motorway, which connects various cities of the country. 

“Motorway police should take action on the incidents of crop residue burning,” the judge said. “The inspector-general of National Highways and Motorways should ensure the implementation of the court orders.”

Subsequently, the court adjourned further proceedings until the next Friday, June 28.