Karachi, Pakistan (AHN) - The State Bank of Pakistan (SBP), the country's central bank, on Tuesday issued guidelines allowing branchless banking aiming to encourage innovation and increase the nation's outreach on the Internet. Branchless banking will allow firms to offer services in a cost effective manner, according to a new set of regulations which specify minimum standards for data and network security, customer protection and risk management.

The new rules represent a convenient alternative to conventional branch-based banking that allow financial institutions and other commercial players to offer services using delivery channels like retail agents and mobile phones.

Under the new regulations, only authorized institutions can provide branchless banking services. Pakistan hopes to avoid implementation, security and standardization problems, and will examine each firm individually to see if it qualifies.

The BB regulations will be applicable to the commercials banks including Islamic banks and Microfinance banks (MFBs).