State Bank of Pakistan Issues Licenses to Foster Innovation and Reach Unbanked Population
Key Takeaways:
i) The State Bank of Pakistan is actively issuing digital banking licenses to foster financial inclusion across the country.
ii) This initiative is expected to drive innovation in the banking sector and offer more accessible financial services through digital channels.
iii) The licensing framework includes different categories of digital banks with varying capital requirements and operational scopes.
Islamabad, Pakistan – April 13, 2025 – Pakistan is making significant strides in the digital finance sector with a focused approach to digital banking licensing. The State Bank of Pakistan (SBP) has been actively issuing licenses to digital banks, aiming to enhance financial inclusion, promote innovation, and provide accessible financial services to the unserved and underserved segments of the population.
The SBP introduced a dedicated “Licensing and Regulatory Framework for Digital Banks” to facilitate the establishment of banks that operate primarily or exclusively through digital channels. This framework outlines the requirements, processes, and guidelines for obtaining a digital banking license in Pakistan. The central bank aims to encourage the development of a robust digital financial ecosystem.
In January 2023, the SBP issued No Objection Certificates (NOCs) to five applicants, including Easypaisa, HugoBank Limited, KT Bank Pakistan Limited, Mashreq Bank Pakistan Limited, and Raqami Islamic Digital Bank Limited. These entities then received In-Principle Approval (IPA) in September 2023, allowing them to prepare for operational readiness.
Most recently, in January 2025, Easypaisa became the first entity to receive a digital retail banking (DRB) license from the SBP. This marks a significant milestone for Pakistan’s digital economy, as it paves the way for a new era of banking that prioritizes digital access and convenience. The SBP Governor, Jameel Ahmad, emphasized the importance of digital banking in fostering financial inclusion and driving economic growth during the licensing ceremony.
The minimum capital requirements for digital banks are notably lower than those for conventional banks, with DRBs requiring a minimum capital that will gradually increase to PKR 4 billion, and DFBs requiring capital that will increase to PKR 10 billion.
The digital banking licensing framework in Pakistan includes two main types of licenses: Digital Retail Banks (DRBs) and Digital Full Banks (DFBs). DRBs primarily focus on serving retail customers, while DFBs can also cater to businesses and corporate entities. The minimum capital requirements for digital banks are notably lower than those for conventional banks, with DRBs requiring a minimum capital that will gradually increase to PKR 4 billion, and DFBs requiring capital that will increase to PKR 10 billion.
The application process involves several stages, starting with the submission of an application, followed by the issuance of an NOC, then an IPA, and finally a restricted license for pilot operations before commencing full commercial operations. Applicants are assessed based on various criteria, including their financial strength, business plan, IT and cybersecurity strategy, and the experience of their sponsors in relevant sectors such as financial services, technology, and telecommunications.
The introduction of digital banks is expected to bring numerous benefits to Pakistan’s economy, including increased financial inclusion by reaching the large unbanked population, enhanced efficiency and convenience for customers through digital service delivery, lower transaction costs, and the promotion of innovation in the financial sector.
