The State Bank of Pakistan (SBP) has officially awarded Mashreq Bank Pakistan Limited (MBPL) a pilot license to operate as a Digital Retail Bank (DBR), marking another significant milestone in Pakistan’s digital banking transformation. The license was presented during a special meeting, where SBP Governor Jameel Ahmed personally awarded the restricted license to MBPL in the presence of the bank’s senior management, including the Deputy Governor of SBP and other senior officials.
This approval for pilot operations places Mashreq Bank Pakistan in an elite group of financial institutions aiming to innovate and lead the way in digital banking. Earlier this year, SBP had already granted the first Digital Retail Bank (DRB) license to a microfinance bank for full commercial operations, signaling the central bank’s commitment to fostering digital transformation in Pakistan’s banking sector.
Mashreq Bank Pakistan, a wholly-owned subsidiary of the UAE-based Mashreq Bank PSC, is well-equipped to leverage its global presence and experience in the banking industry. With a rich history of customer-centric innovation and agility, the bank has the resources to bring advanced digital banking solutions to Pakistan, building on Mashreq’s extensive regional and global footprint, which spans Europe, Asia, Africa, and the U.S.
In 2022, SBP introduced a regulatory framework specifically designed to allow for the licensing of digital banks, aiming to provide financial institutions with the necessary infrastructure to operate entirely through digital channels. The framework includes two categories of licenses: Digital Retail Bank (DRB) and Digital Full Bank (DFB). This move was part of SBP’s broader efforts to bring innovative fintech solutions into the banking ecosystem and offer an alternative to traditional banking services.
The introduction of this framework attracted a wave of interest from both fintech startups and established banking institutions, resulting in 20 applications from major financial players. After a thorough evaluation process, SBP awarded No-Objection Certificates (NOCs) to five institutions, including MBPL, Easypaisa Bank Limited, Raqami Islamic Digital Bank Limited (RIDBL), Hugo Bank Limited, and KT Bank Limited.
SBP Governor Jameel Ahmed shared his expectations for Mashreq Bank Pakistan to uphold the highest standards of excellence by utilizing advanced technologies such as artificial intelligence (AI) and cloud computing to provide seamless, personalized banking services to customers. The Governor emphasized the need for MBPL to contribute to transforming Pakistan’s banking landscape by adhering to rigorous regulatory standards while promoting competition and innovation within the sector.
Ahmed also reaffirmed the SBP’s continued support for innovation in the financial services sector. He noted that the introduction of the digital banking licensing framework is part of a strategic initiative to accelerate digital transformation in Pakistan’s financial system and enhance financial inclusion, particularly among underserved and unbanked populations.
The framework not only enables digital banks to cater to evolving customer needs but also emphasizes the importance of building resilient digital infrastructures. In an era where cybersecurity threats are a growing concern, SBP underscored the necessity of safeguarding both banking operations and customer data to ensure trust and integrity in the financial system.
The role of digital banks like Mashreq Bank Pakistan is expected to be transformative, especially in providing affordable financial services to populations that have long been excluded from traditional banking channels. As the financial sector becomes increasingly digital, SBP remains dedicated to ensuring that these new digital banks uphold technological innovation, offer smooth customer experiences, and comply with stringent regulatory standards. These pillars are essential for building a future-ready, inclusive, and secure financial system in Pakistan.
The pilot operations of MBPL are seen as a key step in realizing this vision, as the bank works toward fully launching its digital retail banking services and contributing to the modernization of Pakistan’s banking ecosystem.