Regulatory Sandbox: State Bank of Pakistan issues guidelines
KARACHI: In line with its Vision 2028, the State Bank of Pakistan (SBP) has issued the Guidelines for the Regulatory Sandbox (RSB) under Section 3 of the Payment Systems and Electronic Fund Transfers (PS&EFT) Act, 2007.
The objective of these guidelines is to facilitate new and existing entities, including startups, to test their financial solutions under a controlled regulatory environment.
The Regulatory Sandbox will follow a cohort-based approach centred around innovative themes. SBP will soon invite applications for participation in its first cohort. The theme(s) of the first cohort will be announced by end June after completing the market engagement, which is already underway.
'Regulatory Sandbox': SBP issues guidelines
The Regulatory Sandbox will enable the participants to test their products and the associated operational models around innovative ideas and technologies. The Sandbox will also help SBP in refining and upgrading the regulatory environment in line with the evolving innovative technologies.
SBP welcomes and encourages all the interested parties to use the RSB platform to test their innovative ideas and products and contribute to Pakistan's evolving Fintech landscape and digital financial ecosystem.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
2 hours ago
- Express Tribune
SBP seeks tax on foreign investment
Listen to article As the local currency comes under renewed stress, the State Bank of Pakistan (SBP) on Saturday proposed linking tax benefits with a minimum one-year retention period for foreign investments in government debt and equity markets to bring predictability in outflows. Dr Mohammad Ali Malik, an SBP executive, suggested the 10% reduced income tax rate should be tied to at least one-year retention of investment made through the Special Convertible Rupee Account (SCRA). He made the proposal during a meeting of the National Assembly Standing Committee on Finance, chaired by Pakistan People's Party (PPP)'s Syed Naveed Qamar. Federal Board of Revenue (FBR) Chairman Rashid Langrial said that investors were securing tax advantages by making short-term investments. He recommended a minimum six-month holding period for investments in Roshan Digital Accounts and other schemes to qualify for tax benefits. With this, the central bank seeks more predictable dollar outflows. However, the committee warned that such a move could deter investors, which the government could not afford. Dr Malik argued that the condition would not disrupt current inflows, as significant investments in treasury bills, government bonds, and SCRAs were not presently being made. He said linking tax incentives with long-term investments could help stabilise outflows. Under SBP regulations, non-residents may freely invest and trade in government marketable securities, including Pakistan Investment Bonds (PIBs), Treasury Bills (TBs), registered corporate debt instruments, and the Water and Power Development Authority (WAPDA)'s registered bonds through SCRAs. Following months of stability, the rupee has again come under pressure due to increased debt repayments. The rupee's value has depreciated to around Rs284 per US dollar in the interbank market, with even higher rates in the open market. A senior executive from a private commercial bank said large interbank transactions are being settled at nearly Rs3 above the average market rate. In an economic alert issued Saturday, advisory firm Tola Associates warned that ongoing unrest in the Middle East and Pakistan's reliance on imported oil posed serious risks of economic disruption. Crude oil prices, it stated, have surged over the past two weeks, rising from $63.76 on June 2 to $76.31 per barrel by June 19 due to the ongoing Gulf conflict. Tola Associates noted a dual inflationary impact on Pakistan's economy: higher crude prices widen the current account deficit and weaken the rupee against the dollar, which further fuels inflation. If crude oil hits $80 per barrel, the rupee may slide to Rs285.4 per dollar; if it rises to $100, the rupee could depreciate further to Rs292.1. In that case, local petrol prices may need to rise by Rs35 per litre, the firm said. The government has already formed a committee, chaired by Finance Minister Muhammad Aurangzeb, to review the implications of Israel's illegal act of war against Iran on Pakistan's economy and petroleum flows. Tola Associates said that the direct impact of higher crude prices on domestic petrol rates may further fuel inflation and make life more difficult for the people of Pakistan. It has estimated the additional impact of inflation by 1.8% in case crude oil price increases to $80 and 8.7% if the prices surge to $100. The current account deficit is also projected to widen to $4.3 billion in the next fiscal year, if crude oil hits $100 price. The standing committee also reviewed another proposal: taxing income from government debt investments even if withdrawn before maturity. Currently, some investors evade taxes by prematurely selling and rebuying securities — a tactic known as "coupon washing." The FBR proposed in the budget that tax be charged on the investment regardless of early withdrawal, estimating an additional Rs10 billion in revenue. However, the committee adjusted the proposal, reducing the required holding period from one year to six months. Last month, the FBR had discussed the coupon washing measure with the International Monetary Fund (IMF). But the IMF was sceptical that people who buy government securities do not pay taxes. Additionally, the committee approved raising the cash withdrawal threshold for non-filers — subject to a 0.8% tax — from Rs50,000 to Rs75,000. However, it rejected the FBR's recommendation to increase the tax rate to 1%, which had been 0.6% before the budget proposal.
Business Recorder
6 hours ago
- Business Recorder
Investment in SCRAs: 12-month holding period proposed for tax concession: FBR chief
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial Saturday said the FBR has proposed a holding period of 12 months for availing concessionary tax regime on investment made in Special Convertible Rupee Accounts (SCRA) under Finance Bill (2025-26). While review of Finance Bill (2025-26) on Saturday at the National Assembly Standing Committee on Finance, Chairman of the Finance Committee Naveed Qamar said that the condition of 'holding period' would discourage investment in the SCRA. The government should set 3-6 months holding period for making investment in the SCRA. The FBR chairman endorsed the viewpoint of Naveed Qamar. The FBR chairman said that we can propose six months holding period. The FBR has already discussed the proposal with the State Bank of Pakistan (SBP). In case of three months proposal, this should be subject to the approval of the Federal Cabinet. FBR directed to immediately stop sealing Tier-1 retail outlets MNA Mirza Ikhtiar Baig stated that the government must watch interest of the overseas Pakistanis making investment in the SCRA. Later, an official of the SBP joined the meeting online from Karachi. Muhammad Ali Malik, executive director SBP informed the committee that the proposed amendment has nothing to do with the Roshan Digital Account. The proposed change is related to the SCRA and not Roshan Digital Account. There should be some limitation of holding period for keeping investment in the SCRAs. We want to discourage short-term investments in the SCRAs. If they keep investment above one year period, the concessional tax regime should be applicable. To avoid volatility in market, the holding period should be one year for the purpose of making investment in the said accounts. The tax advantage should be given to those investors who would keep their investment for at least one year. According to the assessment of the SBP, there would be no immediate or significant impact on investment in case one year holding period is introduced, the SBP official added. The finance committee proposed six months holding period for availing concessionary tax regime on the SCRAs investments. Copyright Business Recorder, 2025
Business Recorder
18 hours ago
- Business Recorder
Inflation expected to lower slightly in Pakistan
After inching up to 3.5% YoY in May, Pakistan's headline inflation is expected to lower slightly, clocking in at 3.1% in June, as per a report by brokerage house JS Global. Pakistan's headline inflation hit 3.5% on a year-on-year basis in May 2025, a reading higher than that of April 2025, when it stood at 0.3%, showed Pakistan Bureau of Statistics (PBS) data. 'Following a 3.5% YoY reading in May 2025, the CPI is expected to be at 3.1% YoY in June 2025. The base effect is now fading, signalling a return to normalised price trends,' said JS Global. This would take the FY25 average to 4.6%, down from the FY24 average of 23.9%, it added. It may be noted that the inflation reading in Pakistan rose to a record 38% on a year-on-year basis in May 2023, the highest level since data was made available beginning in July 1965. As per JS Global, food inflation for June is predicted to rise 2.8% on a YoY basis, which was 0.97% last year, owing to the dissipation of the base effect. 'Nevertheless, price decreases in certain food items are likely to lead to a MoM decline in food inflation. Housing, Gas and Electricity is projected to post a 4% YoY decline in Jun-2025, primarily due to a reduction in electricity tariffs,' it projected. Meanwhile, core inflation is expected to clock in around 8.5% YoY in June. It added that the State Bank of Pakistan (SBP) maintained the policy rate at 11% in the Monetary Policy Committee (MPC) meeting held earlier this week. It noted that from June 2024 till June 2025, the policy rate has been cut by a total of 1,100bp, declining from a peak of 22% to 11%. 'Potential disruptions in global supply chains, and an uncertain outlook for global commodity prices were the key risks highlighted by MPC,' JS Global said. SBP is likely to meet in July 2025 for its next MPC meeting.
