Pakistan tackles financial inclusion through digital banking
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Pakistan tackles financial inclusion through digital banking

Five mobile phones are on charging at same time.
Photo: Getty

Pakistan has been trying to improve financial inclusion for the last 20 years with little success. Are new digital licences the answer?

In January, the State Bank of Pakistan issued no-objection certificates (NOCs) to the establishment of five digital banks in Pakistan, part of the SPB’s newest initiative to boost both financial inclusion and the broader economy.

Twenty banks applied for the licences. The winners were existing financial institutions and new ventures from a broad range of backgrounds: UAE-based bank Mashreq; Pakistani e-money institution Easypaisa; two new joint ventures Hugo Bank and KT Bank; and Raqami, a new venture backed by the Kuwait Investment Authority.

The NOCs permit the banks to set up pilot digital banking products for retail and micro, small and medium-sized enterprises (MSMEs). Once the pilots are approved and the bank has operated for a certain length of time, the NOC offers a pathway to apply for a full commercial banking licence.

The initiative is positive news at a challenging time for Pakistan.

The digital banking licences are very exciting
Humayon Dar, Cambridge Institute of Islamic Finance

The country's ministry of finance is still tackling the impact of Covid, a de-valued rupee, an energy crisis and devastating floods earlier in the year that are estimated to have caused damage worth around 10% of the country’s GDP, according to Moody’s.


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