The State Bank of Pakistan (SBP) said on Wednesday that it has received 20 applications for digital bank licences, as it concluded the process as per its announced deadline of March 31.

The applicants, the central bank said, included domestic commercial banks, microfinance banks, electronic money institutions (EMI) and fintech players.

It added that foreign players already operating in the digital banking space overseas also expressed their interest to venture into the Pakistani market.

“The strong interest shown by both local and international players into SBP’s digital banks’ initiative reflects their confidence in the financial sector of Pakistan and the potential of the investment opportunities available in the country,” SBP said.

Earlier in January, the SBP had launched its 'Licensing and Regulatory Framework for Digital Banks'. It said that the framework is primarily aimed at providing financial services to unserved and underserved segments of society.

“To achieve the intended objectives under this regulatory initiative, the applications were solicited from interested applicants who can demonstrate strong value proposition, robustness of technological infrastructure, sufficiency of financial strength, high level of technical expertise and effectiveness of their risk management culture in the Digital Banks' space,” said the SBP.

A digital bank is defined as a bank offering all kinds of financial products and services primarily through digital platforms or electronic channels instead of physical branches.

Under the regulatory framework, SBP may grant two types of digital bank licenses: 1) Digital Retail Bank (DRB); and, 2) Digital Full Bank (DFB).

DRBs will primarily focus on retail customers while DFBs can deal with retail customers as well as business and corporate entities.

As per the framework, digital banks are required to maintain a principal place of business in Pakistan to house the offices of its management, staff, and other support operations and serve as the main hub/ point of contact for various stakeholders including SBP and other regulators.