SBP Opens Applications for Second Cohort of Regulatory SandboxBusiness

Regulatory sandboxes have become a standard tool for central banks worldwide seeking to encourage fintech innovation while managing risk. By offering a supervised testing ground, regulators can observe how novel solutions behave in practice, identify consumer-protection and stability concerns early, and adapt rules accordingly.

For startups and established firms alike, acceptance into the sandbox provides a pathway to validate ideas with real users without immediately bearing the full weight of regulatory compliance costs — a hurdle that often stalls innovation in highly regulated financial sectors.

The move comes as Pakistan’s central bank continues its broader push toward digitisation of the financial system, including instant payment rails, digital banking frameworks and measures to expand financial inclusion. Industry observers say a well-run second cohort could accelerate the arrival of new payment, lending and savings products tailored to underserved segments.

The central bank has said the second cohort will build on lessons from the inaugural round, with a sharper focus on solutions that advance financial inclusion, digital payments and SME finance — areas where Pakistan still has significant ground to cover despite rapid growth in branchless banking and mobile wallets.

Globally, regulatory sandboxes have helped regulators in the UK, Singapore and the UAE bring new payment and lending models to market faster. For Pakistan, where a large share of the population remains outside the formal financial system, the sandbox offers a testing ground for products designed around local realities — from Urdu-language interfaces to low-bandwidth mobile solutions.

Interested applicants have until the end of November 2026 to submit their proposals, after which the SBP will evaluate entries against its published eligibility and assessment criteria before selecting participants for the testing phase.