Feedback sought on regulatory framework for digital banks

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The proposed framework has been shared with the industry and placed on the SBP’s website for feedback.   Aurora/File
The proposed framework has been shared with the industry and placed on the SBP’s website for feedback. Aurora/File

KARACHI: The State Bank (SBP) on Friday said that it has initiated work on the introduction of a separate framework for digital banks along the lines of regional regulatory trends. The key objectives of the draft Digital Bank Regu­latory Framework are to explore further avenues for financial inclusion, credit access to un-served and underserved, better customer experience, innovation in banking and an inclusive digital eco-system, the SBP said.

The proposed framework has been shared with the industry and placed on the SBP’s website for feedback.

The central bank said the framework 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.

A digital bank serves customers primarily through digital and 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, Raast faster payment system and EMI licences and operation and other initiatives,” said the SBP.

The proposed framework entails guidelines for licensing, and supplementary regulations for digital banks. It sets out different types of digital bank licences, constitution models, minimum eligibility criteria and competencies for sponsors; directors; and CEOs.

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.

Published in Dawn, March 27th, 2021

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