The Securities and Exchange Commission of Pakistan (SECP) is inviting its regulatees as well as fintech start-ups to join the first cohort of its regulatory sandbox as the regulator ramps up efforts to encourage financial innovation.
Opened until the 15th March, applications are opened to the overall corporate sector, including insurance, non-banking finance and capital markets as well as unregistered start-ups. The regulatory sandbox is designed to allow entities to conduct limited scale live tests of innovative products, services, processes and business models. This will be executed in compliance with the SECP’s Regulatory Sandbox Guidelines 2019, which also dictates that participating Islamic financial service providers must ensure their solutions are consistent with Shariah standards.
All applicants will undergo preliminary screening and detailed evaluations, and successful candidates will be allowed to test their innovations for a period of six months. For a nation where Islamic banking assets command about 15% of the entire banking assets pool, the South Asian country has largely lagged behind as far as fintech-driven Islamic financial services are concerned. There is not a single Islamic fintech service provider listed on the IFN Islamic Fintech Landscape as at the end of February 2020. It would be interesting to see if any Islamic financial institutions or start-ups would form the first cohort of SECP’s regulatory sandbox.
Pakistan joins the growing list of countries putting in efforts to support fintech, insurtech and innovation in the Islamic banking and finance industry. The UAE’s Dubai International Financial Centre, Dubai Financial Services Authority and Abu Dhabi Global Market each have sandboxes that allow start-ups to experiment, and the Central Bank of Bahrain, the Saudi Arabian Monetary Authority, Bank Negara Malaysia and the Central Bank of Kuwait all have regulatory sandbox frameworks for Islamic fintech.