KARACHI: In a significant milestone for Pakistan’s financial sector, the State Bank of Pakistan (SBP) has awarded the first restricted license for pilot operations to Mashreq Bank Pakistan Limited (MBPL). The announcement was made during a special meeting attended by the SBP Governor, Deputy Governor, and senior executives, along with the Board and senior management of MBPL.
This development follows SBP’s earlier issuance of a Digital Retail Bank (DRB) license to a microfinance bank for commercial operations, marking another crucial step in Pakistan’s digital banking evolution. MBPL, a wholly owned subsidiary of Mashreq Bank PSC (UAE), brings with it a strong legacy of innovation, customer focus, and technological agility. With an extensive presence across Europe, Asia, Africa, and the US, Mashreq Bank’s global expertise is expected to contribute significantly to Pakistan’s banking landscape.
Digital Banking Framework and Licensing Process
SBP introduced a regulatory framework for full-fledged digital banking services in 2022, allowing both fintech startups and traditional banks to establish digital operations. The framework offers two categories of licenses: Digital Retail Bank (DRB) and Digital Full Bank (DFB), with operations conducted exclusively through digital channels.
To foster competition and innovation, SBP adopted a cohort-based approach, initially granting up to five licenses. The initiative attracted strong interest, with 20 applications submitted by major financial players. Following a rigorous evaluation, SBP granted No-Objection Certificates (NOCs) to five institutions:
- Easypaisa Bank Limited
- Mashreq Bank Pakistan Limited (MBPL)
- Raqami Islamic Digital Bank Limited (RIDBL)
- HugoBank Limited
- KT Bank Limited
SBP Governor’s Vision for Digital Banking
During the meeting, the SBP Governor emphasized the importance of technological advancements such as artificial intelligence (AI) and cloud computing in delivering seamless and personalized banking services. He urged MBPL to maintain high standards of excellence and contribute to the transformation of Pakistan’s financial sector while ensuring regulatory compliance and fostering competition.
The Governor reiterated SBP’s commitment to promoting innovation and progress in the financial sector. He highlighted that the distinct licensing framework for digital banks is a strategic initiative aimed at driving digital transformation and enhancing financial inclusion.
Ensuring Cybersecurity and Financial Inclusion
SBP has stressed the need for digital banks to build resilient infrastructures capable of withstanding cybersecurity threats. As the financial sector becomes increasingly digital, safeguarding operations and customer data is essential for maintaining trust and integrity within the financial system.
Digital banks are expected to play a vital role in providing affordable financial services to underserved and unbanked populations. SBP remains committed to ensuring that digital banks prioritize innovation, customer experience, and strong regulatory compliance, forming the foundation for a future-ready financial system in Pakistan.
