https://arab.news/n9dtz
- The emergence of high-tech companies for efficient service delivery has posed regulatory challenges for Pakistan
- The regulatory sandbox approach has also been adopted by other countries to develop final set of rules for startups
ISLAMABAD: The State Bank of Pakistan (SBP) adopted a collaborative approach to developing a regulatory framework for startups and FinTech companies by issuing preliminary guidelines on Friday with an aim to test them against innovative products and business models before adopting the final set of rules.
The SBP’s “regulatory sandbox” approach is designed to provide a controlled environment for innovators to test their products and technologies, making it easier for the regulator to understand their implications for financial stability and consumer protection.
“State Bank of Pakistan has issued draft guidelines on regulatory sandbox for public consultation,” it said in a brief statement.
The SBP added this would allow the regulated entities, such as startups and FinTech firms, to participate in the process of testing new products and their preferred business models within the provided legal framework.
“As envisioned in SBP Vision 2028, the regulatory sandbox will encourage innovation in digital financial services and facilitate the existing and new market participants to build robust digital payments ecosystem in Pakistan,” the central bank explained in its statement.
“Similarly, it will help SBP to issue instructions and regulations for new and innovative FinTech solutions, ultimately resulting in increased financial and digital inclusion in the country,” it added.
The SBP said its initiative would strengthen its engagement with stakeholders in shaping the future of the country’s financial industry.
It invited banks, FinTech firms, industry experts, public and all interested parties to participate in the consultation process.
Pakistani startups, especially in fintech, e-commerce and logistics, have been attracting considerable investment from both domestic sources and international venture capital firms.
This burgeoning ecosystem, fueled by significant government support and a surge in digital adoption among a young, tech-savvy population, is said to be positioning the country as an emerging hub for technological innovation and entrepreneurship.
As the country increasingly depends on high-tech companies for efficient service delivery, it has been encountering various regulatory challenges.
The regulatory sandboxes approach has also been adopted by other countries, including the United Kingdom, Singapore, Australia and Canada etc., among many others.
Each country’s sandbox is tailored to its specific regulatory environment and financial sector needs, though the core idea is to provide a space where new and potentially disruptive financial technologies can be tested safely and without immediately incurring the full burden of financial regulation.