Page 9 - CMA Journal (July-August 2025)

Exclusive Interview

The primary driver behind this continued growth is the
increased adoption of mobile app-based banking, which Retail payments in Pakistan are
has become the preferred channel for a growing number
of users, offering convenience, accessibility, and real-time showing a strong upward
financial management. Mobile app-based banking has
expanded by 49% by volume during FY25, compared to trajectory. In FY24, transaction
43% in FY24. The Cashless Economy initiative recently
announced by the Prime Minister will further accelerate volumes increased to 6.6 billion
the process of digitization in the country.
from 5.2 billion in FY23, whereas
ICMA: What criteria and safeguards guide the
licensing and oversight of digital banks? the total value also increased to
Governor SBP: SBP has established a comprehensive PKR 548.8 trillion from PKR 405.3
framework for the licensing of digital banks. After a trillion—reflecting an annual
detailed and rigorous evaluation of all submitted
applications, SBP issued No Objection Certificates (NOCs) growth of approximately 26% in
and In-Principle Approvals to five digital retail banks:
HugoBank Limited, KT Bank Pakistan Limited, Mashreq volume and 35% in value
Bank Pakistan Limited, Raqami Islamic Digital Bank
Limited, and EasyPaisa Digital Bank Limited. These five
applicants were selected following a thorough Bank Digital Currency (CBDC) initiative as part of its
assessment in accordance with the defined criteria under broader strategic objectives to enhance financial
the Digital Bank Regulatory Framework. Subsequently, inclusion, improve the efficiency of digital payment
SBP has granted commercial operations approval to systems, advance the digitalization of the economy, and
EasyPaisa Digital Bank Limited and pilot operations reduce the usage of cash in our society.
approval to Mashreq Bank Pakistan Limited and Raqami
Islamic Digital Bank Limited. Since both the concept of CBDC and its underlying
technology are in a nascent stage, the majority of
Regarding the oversight of digital banks, SBP, given the countries globally are exploring the issuance of digital
technology-centric nature of these banks, places currencies and are in various stages of either conducting a
significant emphasis on ongoing oversight and risk Proof of Concept (PoC) or a pilot launch to explore
management. Digital banks face a distinct risk landscape technology options and identify use cases. Few countries
compared to traditional banks, including cybersecurity
have rolled out their versions of CBDCs at a national scale.
threats, third-party dependencies, data privacy
concerns, and operational risks. Moreover, digital banks As part of this exploration, SBP has engaged with other
are expected to maintain strong consumer protection central banks that are piloting or implementing CBDC
measures, particularly in areas of automated projects, and with various technology providers. The
decision-making, data usage transparency, and objective of these engagements is to gain a
grievance redressal mechanisms, to ensure responsible comprehensive understanding of different CBDC models
and inclusive financial services. being deployed in various countries, the underlying
technologies that are available, monetary impact,
ICMA: How is SBP approaching the regulation of virtual governance approaches, and—most importantly—the
assets and the potential launch of a digital currency?
practical use cases that could be relevant to Pakistan’s
Governor SBP: Pakistan has recently enacted its Virtual unique economic and financial environment. SBP plans
Assets Ordinance, which provides a framework for the to undertake a comprehensive PoC with a selected
licensing, regulation, and monitoring of virtual assets technology provider in this domain, primarily for
and their service providers in Pakistan. Under the new identifying viable design choices, possible use cases,
law, the Pakistan Virtual Assets Regulatory Authority available technology options, and capacity building of its
(PVARA) has been established. The Governor of SBP is staff. Once the PoC is completed, SBP will assess the
also on the Board of PVARA, and SBP is actively working findings and determine the next steps in line with its
with the authority to formulate and operationalize the broader policy framework and strategic priorities.
regulatory framework for virtual assets and their
providers in the country. ICMA: In what ways is SBP adopting data analytics and
technology to strengthen regulatory effectiveness?
CBDC is a recent concept in which the central bank of a
Governor SBP: In terms of data analytics, SBP has a
country may issue the national or fiat currency in digital
strong infrastructure in place. To help with data
form using new and emerging technologies. As the
issuer of our national currency, the State Bank of Pakistan gathering, processing, and decision-making, we have set
up a data warehouse.
(SBP) has also undertaken the exploration of the Central
ICMA’s Chartered Management Accountant, Jul-Aug 2025 7