Pakistan eyes greater financial inclusion with issuance of digital bank licenses from March 

This photograph taken on March 4, 2015 shows a Pakistani resident waiting to withdraw currency from an ATM in Islamabad. (AFP/ File)
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Updated 21 January 2022
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Pakistan eyes greater financial inclusion with issuance of digital bank licenses from March 

  • Central bank governor says the country has the potential to add around 100 million accounts through digital banking 
  • State Bank of Pakistan aims for inclusion, innovation and modernization of financial sector through digital banking 

KARACHI: The Pakistani central bank has been making efforts to award licenses for first-ever digital banks in the country from March this year, with its governor saying the South Asian nation has the potential to turn around 100 million mobile phone subscribers into digital bank account-holders. 

A digital bank offers all kinds of financial products and services primarily through digital platforms or electronic channels, essentially giving people access to banking wherever they may be and wherever they have secure Wi-Fi and strong cell signal. 

The introduction of a regulatory framework for digital banks earlier this month was the latest in a series of recent initiatives by the State Bank of Pakistan (SBP) toward introducing new payment solutions in a country with a massive unbanked population. 

The framework allows the issuance of two types of digital bank licenses, Digital Retail Bank (DRB) and Digital Full Bank (DFB). The minimum capital requirement for DRBs is set at Rs1.5 billion during the pilot phase that will gradually increase to Rs4 billion over a transition period of three years. DRBs may graduate to receive license of a DFB if they would meet minimum capital requirement and completion of a two-years progression phase. 

“One of our goals as regulator to introduce a digital bank licensing framework is to promote access to financial services and include those who are not able to access the banking system,” SBP governor Reza Baqir said, during the “Digital Banks – A New Era in Pakistan” webinar hosted by the central bank on Friday.

He said Pakistan’s banking system was sound but it had not realized its full potential in servicing the people who needed access to banking services. 

“As of December 2020, Pakistan had 82 million active deposit accounts, including microfinance accounts as well as mobile accounts,” Baqir said. “During the last three years, 30 million or 60 percent growth was seen in the accounts and the big reason was the mobile phone accounts.” 

The SBP governor said Pakistan had more than 180 million mobile phone subscribers, which meant still there were roughly around 100 million people who didn’t have mobile accounts. “This is one of the illustrations of the potential that is in front of us.” 

Through digital banking, he said, the central bank wanted to promote inclusion, innovation and modernization of the financial sector of the country. 

Baqir said they expected digital banks to promote financial inclusion by providing affordable financial services to unserved and underserved segments of the society, alongside fostering a new set of customer experience. 

The Licensing and Regulatory Framework for Digital Banks is another milestone toward digital transformation and a major step toward revolutionizing the banking industry, he said. 

Arshad Mehmood Bhatti, the executive director of SBP’s Banking Policy and Regulation Group, informed the central bank would initially grant up to five licenses for digital banks. 

“SBP intends to bring digital banks with strong value proposition, robust technological infrastructure, sufficient financial strength, technical expertise and effective risk management culture,” Bhatti said, adding there was no capping on the number of licenses that would be issued after examining the success and failures of the banks. 

SBP officials said both local and international investors could apply for digital bank licenses. A traditional bank having minimum one-year experience of delivering Digital Financial Services (DFS) in the retail customer segments could apply either individually or with other equity participants, they explained. 


Pakistan’s stocks, dollar bonds plunge amid investor concerns over surging tensions with India

Updated 24 April 2025
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Pakistan’s stocks, dollar bonds plunge amid investor concerns over surging tensions with India

  • Pakistani stocks lose two percent of their index value at close of market, dollar bonds decline by more than four cents
  • Tensions between India and Pakistan surged this week after Delhi blamed Islamabad for an attack in Jammu and Kashmir

KARACHI: Pakistan’s stocks and dollar-denominated bonds plunged in value on Thursday, which financial experts attributed to investor concerns over surging tensions between Islamabad and New Delhi. 

Pakistan’s stocks shed two percent of their index value when the market closed on Thursday, as per data from the Pakistan Stock Exchange (PSX). The benchmark KSE-100 Index plummeted to 114,661 points but managed to recover some ground before closing at 115,019.81 points. 

Pakistan’s dollar-denominated bonds maturing in 2036 also declined by more than four cents to 74 cents, international news agency Reuters reported, citing data from Tradeweb. Pakistani financial experts attributed the plunges to increasing investor concerns after renewed tensions between Islamabad and New Delhi. 

New Delhi on Wednesday blamed Pakistan for being involved in an attack this week in Indian-administered Kashmir. Gunmen killed 26 men at a tourist site in the Anantnag district in Indian-administered Kashmir, following which India announced it was suspending its decades-old water-sharing treaty with Pakistan, among a raft of measures that included downgrading ties with Islamabad on Wednesday. Pakistan denied involvement in the attack and reciprocated with similar measures on Thursday. 

“Both the KSE-100 and Nifty-50 are in the red today due to pressure from rising Pakistan-India tensions following the Pahalgam incident,” Najeeb Ahmed Khan Warsi, head of online trading at brokerage firm Foundation Securities Ltd., told Arab News.

The Nifty-50 is India’s National Stock Exchange index, representing the float-weighted average of the country’s 50 largest listed companies.

Warsi said investor sentiment remained “cautious” despite corporate earnings largely aligning with market expectations, noting that trading at Asian markets had also subdued with global recovery losing momentum amid uncertainty over the US–China tariff policy.

“Geopolitical and global economic concerns continue to overshadow market fundamentals,” he said. 

Kamal Ahmed, an analyst at AKD Securities Ltd., said whenever border tensions arise, stock markets in both countries experience uncertainty. This prompts investors to take safer positions that impacts the market negatively. 

“The market sentiment going forward will depend on how long this standoff lasts,” Ahmed explained. “Investors will remain cautious and the market could decline further if the situation escalates.”

Top brokerage firm Topline Securities said the plunge reflected “heightened investor caution.”

“Despite the risk-averse sentiment, overall participation remained firm with volumes clocking in at 505 million shares and a turnover of Rs24.44 billion ($87.94 million), underscoring continued investor engagement amid macro and geopolitical overhangs,” Topline Securities said in a statement. 

Despite being supported by strong earnings, Pakistan’s stock index has lost 2.9 percent since Tuesday, when the attack took place. Pakistan’s stock market has been performing impressively, gaining more than 80 percent last year in both dollar and rupee terms. This surge was primarily driven by investor optimism surrounding a positive review by the International Monetary Fund, whose executive board is expected to approve a $1 billion tranche for Pakistan next month.

Further positive developments, such as global ratings agency Fitch recently upgrading Pakistan’s credit rating, are expected to support the growth of the country’s equities. 


What is The Resistance Front, the militant group linked to Pahalgam attack?

Updated 24 April 2025
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What is The Resistance Front, the militant group linked to Pahalgam attack?

  • Kashmir Resistance has claimed responsibility for Tuesday’s attack on tourists in Indian-administered Kashmir
  • The group, which emerged in 2019, has not previously had any major incidents attributed to it

Kashmir Resistance, also known as The Resistance Front, has claimed responsibility for Tuesday’s attack on tourists in Indian-administered Kashmir, the deadliest incident of its kind in India since the 2008 shootings in Mumbai.

Here are some facts about the group.

WHAT IS TRF?

TRF emerged in 2019 and is considered an offshoot of the Pakistan-based Lashkar-e-Taiba, according to the South Asia Terrorism Portal, a Delhi-based think tank. Islamabad denies it supports any terror groups.

Indian security officials said TRF uses the name Kashmir Resistance on social media and online forums, where it claimed responsibility for Tuesday’s attack in Indian Kashmir’s Pahalgam area.

Lashkar-e-Taiba, listed as a foreign terrorist organization by the United States, is the group accused of plotting attacks in India and in the West, including the three-day assault on Mumbai in November 2008.

“This is basically a front of the LeT. These are groups which have been created over the last years, particularly when Pakistan was under pressure from the Financial Action Task Force and they were trying to create a pattern of denial that they were involved in terrorism in Jammu and Kashmir,” said Ajai Sahni, head of the South Asia Terrorism Portal.

WHAT HAS THE GROUP DONE?

The group has not previously had any large incidents attributed to it, according to Sahni.

“All TRF operations are essentially LeT operations. There will be some measure of operational freedom as to where they hit on the ground, but the sanction would have come from the LeT,” Sahni said.

WHAT DOES INDIA SAY ABOUT TRF?

India’s interior ministry told parliament in 2023 that the group had been involved in the planning of killings of security force personnel and civilians in Jammu and Kashmir.
The group also coordinated the recruitment of militants and the smuggling of weapons and narcotics across the border, the ministry said.

Intelligence officials told Reuters that TRF had also been issuing online threats against pro-India groups for the past two years.

WHAT DOES PAKISTAN SAY?

Pakistan has denied that it supports and funds militants in Kashmir, saying it offers only moral and diplomatic support.


‘Act of war’: Pakistan announces retaliatory measures as India downgrades ties following deadly attack 

Updated 24 April 2025
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‘Act of war’: Pakistan announces retaliatory measures as India downgrades ties following deadly attack 

  • India alleges cross-border involvement in Tuesday’s attack, suspends Indus Waters Treaty, closes only land border among other measures
  • Pakistan says will respond with “full force across the complete spectrum of national power” if India diverts or stops its waters

ISLAMABAD: Pakistan said on Thursday any attempts by India to stop or divert its waters under the Indus Waters Treaty would be seen as an “act of war” that the country would respond to with “full force across the complete spectrum of national power.”

The announcement came as part of a raft of measures taken by Islamabad after Prime Minister Shehbaz Sharif chaired a meeting of the National Security Committee (NSC) to discuss Pakistan’s response to escalatory actions announced by India on Wednesday following a deadly militant attack in Indian-administered Kashmir in which 26 tourists were killed and that New Delhi says Islamabad is behind. Pakistan has denied involvement.

Kashmir has been disputed between India and Pakistan since 1947. Both control separate parts of the Himalayan region but claim it in full.

Indian Foreign Secretary Vikram Misri said on Wednesday a cabinet committee on security was briefed on the cross-border linkages of the latest attack, but did not offer any proof of the linkages or provide any more details. In response to the attack, he said India was spending the Indus Waters Treaty with immediate effect, closing the only open land border crossing point at Attari-Wagah, disallowing Pakistani nationals from traveling to India under special South Asian visas, and declaring all defense advisers in the Pakistani mission in New Delhi persona non grata, with a week to leave. India would also pull out its own defense advisers in Pakistan and reduce the staff size at its mission in Islamabad to 30 from 55, Misri said.

“The Committee reviewed the Indian measures announced on 23 April 2025 and termed them unilateral, unjust, politically motivated, extremely irresponsible and devoid of legal merit,” said a statement from thee Pakistani PM’s office after the NSC meeting.

Islamabad said it rejected the Indian announcement to hold the Indus Waters Treaty in abeyance, as it was a binding international agreement brokered by the World Bank and contained no provision for unilateral suspension. 

“Water is a vital national interest of Pakistan, a lifeline for its 240 million people and its availability will be safeguarded at all costs,” the statement said.

“Any attempt to stop or divert the flow of water belonging to Pakistan as per the Indus Waters Treaty, and the usurpation of the rights of lower riparian will be considered as an Act of War and responded with full force across the complete spectrum of National Power.”

The treaty, mediated by the World Bank in 1960, split the Indus River and its tributaries between the neighbors and regulated the sharing of water. The treaty remains one of the world’s most resilient water-sharing agreements, withstanding even wars and decades of strain between the neighbors.

Pakistan is heavily dependent on water flowing downstream from this river system from Indian Kashmir for its hydropower and irrigation needs. Suspending the treaty would allow India to deny Pakistan its share of the waters.

“COMMITTED TO PEACE”

Diplomatic relations between neighboring Pakistan and India were weak even before the latest measures were announced as Pakistan had expelled India’s envoy and not posted its own ambassador in New Delhi after India revoked the semi-autonomous status of Kashmir in 2019.

India has long accused Pakistan of involvement in an insurgency in Kashmir, but Islamabad says it only offers diplomatic and moral support to Kashmiris in their struggle for self-determination.

Tens of thousands of people have been killed in Kashmir since the uprising began in 1989, but it has tapered off in recent years and tourism has surged in the scenic region.

Among other retaliatory measures announced on Thursday, Pakistan said it would exercise the right to hold all bilateral agreements with India, including but not limited to the 1972 Simla Agreement, in abeyance. 

The Simla Agreement says both countries will “settle their differences by peaceful means through bilateral negotiations.” India has consistently maintained that the Kashmir dispute is a bilateral issue and must be settled through bilateral negotiations as per the Simla Agreement, 1972 and under the treaty has denied any third party intervention even from United Nations.

Pakistan also said it would close the Wagah land border with immediate effect and suspend all cross-border transit from India through this route “without exception.” With no direct flights operating between the two countries, the move cuts all transport links between them.

Islamabad said those who had crossed with valid visas through Wagah could return through that route by April 30.

Islamabad also suspended all visas under the SAARC Visa Exemption Scheme (SVES) issued to Indian nationals and deemed them canceled with immediate effect, with the exception of Sikh pilgrims who frequently travel to Pakistan to visit religious sites. Pakistan gave Indian nationals currently in Pakistan under SVES 48 hours to leave.

“Pakistan declares the Indian Defense, Naval and Air Advisers in Islamabad persona non grata,” the statement added. 

“They are directed to leave Pakistan immediately but not later than 30 April 2025. These posts in the Indian High Commission are deemed annulled. Support staff of these Advisers are also directed to return to India.”

Islamabad will also reduce the strength of the Indian High Commission in the capital to 30 diplomats and staff members from April 30 and Pakistan’s airspace would be closed with immediate effect for all Indian owned or Indian operated airlines. All trade with India, including to and from any third country, has also been suspended. 

“The Pakistani nation remains committed to peace, but will never allow anyone to transgress its sovereignty, security, dignity and their inalienable rights,” the statement concluded. 

India has not yet responded to Pakistan’s measures but police in India’s Kashmir published notices on Thursday naming three suspected militants “involved in” Tuesday’s attack and announced rewards for information leading to their arrest.

Two of the three suspected militants are Pakistani nationals, the notices said.

Indian Prime Minister Narendra Modi, in his first speech since the attack in the Himalayan region, vowed on Thursday to punish all those responsible.

“I say to the whole world: India will identify, track and punish every terrorist and their backer,” the Indian prime minister said. “We will pursue them to the ends of the Earth.”


With inputs from Reuters


What is the Indus Waters Treaty between India and Pakistan?

Updated 24 April 2025
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What is the Indus Waters Treaty between India and Pakistan?

  • Treaty, brokered in 1960, is water distribution agreement that divides six rivers of Indus Basin between Pakistan and India
  • India revoked treaty this week as part of escalatory actions following militant attack in Indian-administered Kashmir

ISLAMABAD: India on Wednesday suspended a six-decade-old river-sharing treaty with Pakistan as part of a raft of measures following a deadly militant attack in Indian-administered Kashmir that it says Islamabad is behind.
Pakistan has denied involvement in the attack, in which gunmen killed 26 men at a tourist site in Pahalgam, a scenic town in the Anantnag district, on Tuesday in the worst assault on civilians in the country in nearly two decades.
On Thursday, Pakistan said any attempts by India to stop or divert its waters under the Indus Waters Treaty would be seen as an “act of war.”
“Water is a vital national interest of Pakistan, a lifeline for its 240 million people and its availability will be safeguarded at all costs,” said a statement from the Pakistani Prime Minister’s office after he chaired a meeting of the National Security Committee. 
“Any attempt to stop or divert the flow of water belonging to Pakistan as per the Indus Waters Treaty, and the usurpation of the rights of lower riparian will be considered as an Act of War and responded with full force across the complete spectrum of National Power.”

HISTORY

The Indus Waters Treaty, brokered by the World Bank in 1960, allocates the six Indus Basin rivers between India and Pakistan, with the Bank acting as its guarantor.
The treaty took effect on April 1, 1960, and was officially signed on September 19, 1960, in Karachi by Pakistan’s President Ayub Khan and India’s Prime Minister Jawaharlal Nehru.
Pakistan has rights to the western rivers— Indus, Jhelum, and Chenab— for irrigation, drinking, and non-consumptive uses like hydropower. India controls the eastern rivers— Ravi, Beas, and Sutlej— for unrestricted use but must not significantly alter their flow.
India can use the western rivers for limited purposes such as power generation and irrigation, without storing or diverting large volumes. Experts, like Hassaan F. Khan from Tufts University, argue that India lacks the infrastructure to divert large amounts of Indus waters.
The treaty also created a permanent Indus Commission and a dispute resolution framework, and despite wars and decades of tensions between Pakistan and India, it remains one of the world’s most resilient water-sharing agreements. 
There is no provision in the treaty for either country to unilaterally suspend or terminate the pact, which has clear dispute resolution systems.

WHAT ARE THE CONCERNS OVER WATER?
The nuclear-armed neighbors have argued over and disputed several projects on the Indus and its tributaries in India for years.
Pakistan is heavily dependent on water from this river system for its hydropower, irrigation and drinking needs. Pakistan says India unfairly diverts water with the upstream construction of barrages and dams, a charge India denies.
If the treaty is suspended, Pakistan is concerned India’s dams will cut flows on the river, which feeds 80 percent of its irrigated agriculture. Pakistan fears that India may limit or divert water flows especially during dry seasons, potentially harming crops, reducing food production, and increasing water scarcity in vulnerable areas.
Islamabad has asked for a neutral expert and then an arbitration court to intervene in two recent hydropower projects.
India has accused Pakistan of dragging out the complaints process and says the construction of its Kishanganga and Ratle hydroelectric projects is allowed under the treaty. It has also sought modification of the pact to get around such delays.
The suspension also raises tensions between the nuclear-armed neighbors and puts pressure on Pakistan to seek international support or explore legal, diplomatic, or military recourse. It also adds further uncertainty to the region, turning water into another flashpoint in an already fragile relationship.

WHAT COULD THE SUSPENSION CHANGE?
The suspension of the accord is not expected to have an immediate impact on the flow of water to Pakistan as India does not have enough storage capacity.
But India’s move could bring uncertainty for Pakistan’s agricultural system.
The suspension means India can stop sharing crucial information and data on release of water from barrages/dams or on flooding, Indian officials said, adding that New Delhi will also not be obliged to release minimum amounts of water during the lean season.

With inputs from Reuters


Pakistan tells OIC envoy Kashmiris expect Muslim world’s support in struggle for freedom

Updated 24 April 2025
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Pakistan tells OIC envoy Kashmiris expect Muslim world’s support in struggle for freedom

  • Ambassador Yousef M. Al Dobeay visited Pakistan and met with officials from April 19 to 22
  • Foreign office says he was briefed about rights violations against Kashmiris under Indian rule

ISLAMABAD: Pakistan informed a visiting Organization of Islamic Cooperation (OIC) official this week the people of Indian-administered Kashmir have high expectations from the Muslim world and the 57-member bloc in their struggle for fundamental rights and freedoms under Indian rule, the foreign ministry said on Thursday.

The statement came a day after India announced a series of retaliatory measures against Pakistan following a deadly militant attack in Kashmir that killed 26 people at a tourist resort.

According to the foreign office, OIC Secretary General’s Special Envoy for Jammu and Kashmir, Ambassador Yousef M. Al Dobeay, visited Pakistan from April 19 to 22, during which he held meetings with Pakistani officials.

“The Special Envoy was apprised of the systematic human rights violations in Indian Illegally Occupied Jammu and Kashmir (IIOJK) and the destabilizing impact of India’s belligerent rhetoric and retrogressive actions,” the foreign office said.

“It was underscored that the Kashmiris placed their trust in the OIC and the Muslim Ummah for proactive assistance in realization of their fundamental rights and freedoms, and the peaceful resolution of the Jammu and Kashmir dispute in accordance with the relevant UN Security Council resolutions,” it added.

Ambassador Al Dobeay emphasized that Palestine and Jammu and Kashmir remained foremost priorities on the OIC’s agenda and discussed ways to alleviate the sufferings of the Kashmiri people.

This was Ambassador Al Dobeay’s fifth visit to Pakistan and Azad Jammu and Kashmir since his appointment as the OIC Secretary General’s Special Envoy for Jammu and Kashmir.

India suspended the Indus Waters Treaty, closed the only land border crossing at Attari, expelled Pakistani defense attachés at its high commission in New Delhi and reduced its own diplomatic staff in Islamabad.

The attack, claimed by the “Kashmir Resistance” group, is said to be the worst on civilians in India in nearly two decades.