KARACHI: As many as 20 entities (both local and foreign) have applied for the licenses of digital banks under the State Bank of Pakistan’s ‘licensing and regulatory framework for digital banks’ and the central bank will initially issue up to five digital banks licenses.

Also, the SBP is in the initial phase of exploring the Central Bank Digital Currency (CBDC), a recently emerged hot topic in the financial space.

Addressing as the chief guest at the 8th Mobile Commerce, and Digital Banking Conference here at a local hotel, the Deputy Governor SBP Sima Kamil said: “We are looking at the licensing framework for digital banks. Response is positive as 20 entities have applied for this. In the first phase, we will give licenses to some five entities.”

The banking regulator is going through a very rigorous process, in this regard.

She hopped that this will enhance financial inclusion. It is part of SBP’s comprehensive efforts to promote digital financial services in the country. We want them to look at agriculture, SMEs, Housing, Women empowerment, etc.

Trust building, and cyber security are one of challenges for digital banking, and she called for the improved security features in apps, and internet banking. “We have to take banks out of comfort zone, with bringing the challenging financial technology in the country.”

CBDC is interesting yet a very big project; however SBP is just in initial exploration phase. SBP along with the stakeholders is looking at what benefits can be achieved through this initiative, she said.

While elaborating, Sima said: “CBDC is not a crypto currency; rather it will be legal tender, and liability of the government, and the central bank. It is a digital token, and anyone can use them to make digital payments.”

She said financial inclusion is not something you open a bank account and make transactions. Why should a lay man open a bank account? What benefit we are giving to him for account opening. We have to move beyond account opening and payment system, and the financial institutions should come up with products and services to benefit customers.

She said capacity building in IT sector is the need of hour to train people and motivate them work within the country.

The SBP as regulator is creating enabling environment in the country where the financial inclusion is very low. She said account opening for the women in rural areas, and overseas Pakistanis was a big challenge some time ago, primarily due the rules and regulations of banks.

SBP launched Roshan digital account which was the big initiative. Around four hundred and ten thousand accounts have opened now, and investment in RDA whether in banks or government papers is around about $4.4 billion. This is a sizeable amount which is growing.

She recalled that the overseas Pakistanis were initially facing problems in RDA opening. They had to go to embassies, verify papers etc. However, after learning this experience, SBP introduced digital remote account opening framework which has very simple procedure. Only CNIC and cell number are required for the account opening for women.

For those unbanked mostly in rural areas who even don’t have smart phones and internet connectivity, the SBP has announced Asaan mobile account which enables individuals to perform transactions using a simple mobile phone. As many as 4 million accounts have been opened”, although this is in its soft launch phase and account holders can make transactions through their basic or smart phones without the need for internet connectivity.

The SBP has also developed instant payment system called Raast with an objective of promoting the adoption of digital finance services in the country. Out of the 20 million micro finance banking app users in Pakistan, over 13 million are Raast ID holders. The SBP want not only the existing banking population to shift in Raast ID, but banks should encourage unbanked towards this instant payment platform. She said two features of Raast banking have been launched one is Raast Bulk Payment, and person to person (P2P) which is growing. Our aim is very soon there should be a million transactions every day. “Telenor microfinance bank, and Mobilink microfinance bank are the two best performers, so far,” She said.

Senior Banker Sirajuddin Aziz, ECO 1Link Najeeb Agrawala, CEO Payfast Adnan Ali, Head Digital Channel Management Faysal Bank Fahad Mirza, Chief Marketing Officer Telenor Umair Mohsin, the conference coordinator Ateeq Ur Rehman and others spoke during the conference.

Mehmood Tareen CEO of the Professionals’ Network (TPN) who organized the event thanked the speakers, panelists, and participants of the conference in his concluding speech.

Copyright Business Recorder, 2022