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Pakistan's Thriving Fintech: Regulatory Frameworks & Partnerships

· 2 min read
Emily Brown
Forensic Auditor

By Sahar Iqbal

Overview 👩‍🏫​

Pakistan's financial regulatory framework, spearheaded by the State Bank of Pakistan (SBP), has been instrumental in fostering a thriving fintech sector. This article explores various aspects of Pakistan's fintech sector, including regulatory frameworks, notable partnerships, and key regulations.

Robust Regulatory Framework 📄​

  • Empowered by the State Bank of Pakistan Act 1956
  • Comprehensive guideline for digital banks published in 2022
    • Applicable to traditional banks, international banks, DFSPs, and EMI entities
    • Encourages collaborations and applications from established entities and investors
    • Eligibility conditions for existing banks with regards to digital bank licenses

Regulatory Sandbox 🧱​

  • Introduced by the Securities and Exchange Commission of Pakistan in 2019
  • Promotes financial inclusion and innovation within fintech
  • Detailed guidelines for startups on eligibility, application processes, and participation requirements
  • Controlled environment for testing products and services

Significant Partnerships 🤝​

D-Bank and Kleiner Perkins / Sequoia Capital​

  • Law firm advised on foreign investors first venture capital investment in D-Bank

Avanza Group and Premier Systems​

  • Joint venture to establish a local online payment gateway system in Pakistani e-commerce industry

Regulatory Environment for Fintech Companies 💻​

  • Subject to various regulations in addition to the primary SBP framework
    • The Electronic Transactions Ordinance 2002 (ETO)
    • The Payment Systems and Electronic Fund Transfers Act 2007
    • Anti-Money Laundering and Counter-Terrorism Financing Regulations (AML/CTF Regulations)

Consumer Protection 🛡️​

  • Personal Data Protection Bill 2023
  • Regulates processing, collection, use, disclosure, and transfer of personal data
  • Fosters trust in online transactions and information sharing

Conclusion 🏁​

Pakistan's fintech sector has experienced significant growth and innovation, with regulatory frameworks like the SBP and SECP's initiatives taking a central role in fostering fintech startups and promoting financial inclusion. Key partnerships and investments underscore the continued evolution and maturation of Pakistan's fintech sector.