The State Bank of Pakistan is set to gain a new role in the management and centralisation of banking information following an amendment to the Income Tax Ordinance, 2001. The amendment enables the State Bank of Pakistan to establish, operate and maintain a secure, centralised virtual repository containing banking data, records and financial transactions of persons maintained by scheduled banks. The development is part of changes introduced to strengthen digital access to financial information and support automated comparison between banking activity and tax records.
Under the amended framework, the State Bank of Pakistan will be able to maintain a centralised system that brings together banking information held by scheduled banks. The repository is intended to provide a secure digital structure for banking data while incorporating confidentiality safeguards. The amendment specifically addresses how information can be collected and processed despite existing banking confidentiality laws, creating a framework through which relevant financial information can be electronically submitted and analysed under the revised tax administration system.
A key provision of the amendment is the insertion of new Section 165AB into the Income Tax Ordinance, 2001. Under this section, every banking company and Electronic Money Institution will be required to electronically upload prescribed information to the Central Data Hub concerning account holders whose deposits or withdrawals exceed Rs100 million during a reporting period. The information will be used for algorithmic cross-matching of tax and banking data, allowing the system to identify significant differences between financial activity and information available within the tax system.
The amendment also establishes controls over how the digitally processed information can be accessed during the cross-matching process. The information uploaded to the system will not be visible to income tax authorities while the initial algorithmic assessment is being carried out. Instead, the data will undergo digital processing to identify potential discrepancies. Only cases involving a gross mismatch will be transferred to the Board’s Compliance Risk Management system, where they can proceed for further action through the National Faceless Centre.
The new framework therefore places greater emphasis on automated data processing rather than immediate manual scrutiny of banking information. The Central Data Hub will serve as the platform for receiving prescribed information from banks and Electronic Money Institutions, while algorithmic cross-matching will be used to compare banking activity with tax information. This approach is intended to create a structured process for identifying cases that require further examination while limiting direct access to the underlying information during the initial stage of analysis.
The amendment also provides definitions for several terms that will be relevant to the operation of the new system, including reporting period, specified date, accounts, peak credits, Central Data Hub and Compliance Risk Management. By defining these terms within the amended legal framework, the authorities have established the terminology that will govern the reporting and processing of banking information. Confidentiality safeguards have also been included to regulate the handling of the data and protect information during the digital cross-matching process.
The development marks an expansion of technology-based financial data management within Pakistan’s tax and banking framework. With banks and Electronic Money Institutions required to electronically submit information on transactions crossing the Rs100 million threshold, the system will create a centralised mechanism for comparing high-value banking activity with tax records. The State Bank of Pakistan’s role in establishing and maintaining the secure virtual repository will also place it at the centre of the infrastructure supporting the new data-sharing arrangement.
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