In a strategic move aligned with its Vision 2028, the State Bank of Pakistan (SBP) has released comprehensive Guidelines for the Regulatory Sandbox (RSB), a framework designed to facilitate innovation in the country’s financial sector. Issued under Section 3 of the Payment Systems and Electronic Fund Transfers (PS&EFT) Act, 2007, the guidelines aim to support both new and existing entities, including startups, in testing financial solutions within a controlled and risk-mitigated regulatory environment.
The concept of a regulatory sandbox allows companies to experiment with emerging technologies and financial models under the close supervision of the central bank. This enables firms to develop, refine, and validate their products without immediately being subject to the full spectrum of regulatory requirements. At the same time, it allows the SBP to monitor innovations in real-time, providing insights that may influence future regulatory approaches.
The SBP has announced that the Regulatory Sandbox will adopt a cohort-based model, meaning that participants will be grouped and guided through a specific testing phase based on selected themes. The themes will be designed to reflect current market trends and technological advancements in digital finance. According to SBP, the themes for the first cohort will be finalized and announced by the end of June 2025, following the completion of the market engagement process currently underway.
Entities participating in the sandbox will be able to test a wide array of products and services, including but not limited to, blockchain applications, digital wallets, payment systems, robo-advisory tools, and other fintech innovations. The sandbox environment offers a unique opportunity to simulate real-world operations under limited exposure, allowing innovators to assess product viability while minimizing potential risks to consumers and the financial system.
This initiative is a key element in SBP’s broader strategy to modernize Pakistan’s financial infrastructure and foster a more inclusive digital ecosystem. By offering a structured testing environment, the SBP is providing an important platform for fintech startups, tech-driven financial institutions, and other innovators to refine their offerings before scaling to a wider market.
The Regulatory Sandbox is expected to contribute significantly to Pakistan’s fintech growth by enabling informed and balanced regulation. As digital transformation continues to redefine financial services globally, such frameworks are critical in ensuring that innovation does not outpace oversight, thus maintaining consumer protection and systemic stability.
The SBP has encouraged all interested entities to participate in the Regulatory Sandbox and become active contributors to the evolving digital financial landscape of Pakistan. Inquiries and feedback regarding the sandbox program can be directed to the dedicated SBP team via regulatory.sandbox@sbp.org.pk.
This step places Pakistan in line with global financial regulators who have already implemented sandbox models, including authorities in the United Kingdom, Singapore, and the United Arab Emirates. By facilitating experimentation and iterative learning, SBP’s sandbox aims to strike a balance between encouraging innovation and upholding the integrity of the financial system. It marks a progressive shift toward a more agile and adaptive regulatory environment in Pakistan’s fintech sector.