KARACHI: The State Bank of Pakistan (SBP) said on Wednesday it had granted in-principal approval (IPA) for establishing five digital retails banks (DRBs) in a bid to “foster innovation, financial inclusion and availability of affordable digital financial services.”
SBP issued no-objection certificates to five successful applicants for establishing digital banks in Pakistan in January 2023. After the fulfillment of necessary requirements, the entities have now been granted in-principal approval to prepare themselves operationally to launch digital financial services.
The five digital retail banks are HugoBank Limited, KT Bank Pakistan Limited, Mashreq Bank Pakistan Limited, Raqqami Islamic Digital Bank Limited and Telenor Microfinance Bank Limited.
A digital bank operates online and provides its customers the services that were previously available only at a bank branch. DRBs usually cater to the retail segment like individual customers and small and medium businesses.
“Governor SBP highlighted the significance of the initiative of introducing DRBs in the country, its profound benefits to the financial system and some of the key challenges faced by such a genre of financial players,” the SBP said, quoting Jameel Ahmed, who also spoke about other important regulatory initiatives in support of building a digital financial ecosystem and assured that the SBP was fully committed to supporting various stakeholders for a “bright, innovative, and digitally empowered future of banking in Pakistan.”
“Jameel Ahmed also shared his expectations that post operational commencement, digital banks will help developing a digital eco-system, foster a new set of customer experience, provide affordable digital financial services including credit access to unserved and underserved segments of the society,” the central bank said.
The in-principal approvals will enable the proposed DRBs to proceed further with achieving operational readiness in all functions, including governance, risk management, capital requirements, compliance and audit, consumer protection, business continuity, cybersecurity, product development, deployment of technological infrastructure, formulation of relevant policies, processes and procedures.
Earlier this year, SBP issued no-objection certificates to the proposed DRBs, allowing them to incorporate as a Public Limited Company with the Securities and Exchange Commission of Pakistan (SECP). The five institutions were selected after a thorough and rigorous evaluation process based on a comprehensive set of parameters including fitness and propriety, experience and financial strength; business plan; implementation plan; funding and capital plan; IT and cybersecurity strategy and outsourcing arrangements.
Upon attaining operational readiness, the five institutions would finally be required to seek approval of the SBP for the commencement of operations.
Pakistan’s central bank approves five digital retail banks
https://arab.news/9cdz7
Pakistan’s central bank approves five digital retail banks
- State Bank issued no-objection certificates to five applicants for establishing digital banks in Pakistan in January 2023
- HugoBank, KT Bank Pakistan, Mashreq Bank Pakistan, Raqqami Islamic Digital Bank, Telenor Microfinance Bank approved
IMF hails Pakistan privatization drive, calls PIA sale a ‘milestone’
- Fund backs sale of national airline as key step in divesting loss-making state firms
- IMF has long urged Islamabad to reduce fiscal burden posed by state-owned entities
KARACHI: The International Monetary Fund (IMF) on Saturday welcomed Pakistan’s privatization efforts, describing the sale of the country’s national airline to a private consortium last month as a milestone that could help advance the divestment of loss-making state-owned enterprises (SOEs).
The comments follow the government’s sale of a 75 percent stake in Pakistan International Airlines (PIA) to a consortium led by the Arif Habib Group for Rs 135 billion ($486 million) after several rounds of bidding in a competitive process, marking Islamabad’s second attempt to privatize the carrier after a failed effort a year earlier.
Between the two privatization attempts, PIA resumed flight operations to several international destinations after aviation authorities in the European Union and Britain lifted restrictions nearly five years after the airline was grounded following a deadly Airbus A320 crash in Karachi in 2020 that killed 97 people.
“We welcome the authorities’ privatization efforts and the completion of the PIA privatization process, which was a commitment under the EFF,” Mahir Binici, the IMF’s resident representative in Pakistan, said in response to an Arab News query, referring to the $7 billion Extended Fund Facility.
“This privatization represents a milestone within the authorities’ reform agenda, aimed at decreasing governmental involvement in commercial sectors and attracting investments to promote economic growth in Pakistan,” he added.
The IMF has long urged Islamabad to reduce the fiscal burden posed by loss-making state firms, which have weighed public finances for years and required repeated government bailouts. Beyond PIA, the government has signaled plans to restructure or sell stakes in additional SOEs as part of broader reforms under the IMF program.
Privatization also remains politically sensitive in Pakistan, with critics warning of job losses and concerns over national assets, while supporters argue private sector management could improve efficiency and service delivery in chronically underperforming entities.
Pakistan’s Cabinet Committee on State-Owned Enterprises said on Friday that SOEs recorded a net loss of Rs 122.9 billion ($442 million) in the 2024–25 fiscal year, compared with a net loss of Rs 30.6 billion ($110 million) in the previous year.
