Good News: Bank of Balochistan Moves Ahead with Establishment as Islamic Bank

The Balochistan government, which approved the establishment of the Bank of Balochistan in August 2025, has now taken a major step forward by moving to establish it as a public-sector Islamic bank. Officials describe this initiative as a significant step toward strengthening provincial financial autonomy and improving access to banking services across the province.

Also Read: Why Balochistan Needs Its Own Bank?

Cabinet Approval and Feasibility Report

The decision was taken during the 30th provincial cabinet meeting held in Quetta, chaired by Chief Minister Mir Sarfraz Bugti. The Finance Department presented a detailed feasibility report conducted by KPMG Taseer Hadi & Co.

The report concluded that a provincial bank could help bridge long-standing gaps in financial inclusion and support Balochistan’s development needs. After extensive discussions, the cabinet gave principal approval to create a Public Sector Islamic Bank of Balochistan.

Funding Requirements

Officials informed the cabinet that Rs 12 billion will be required for the bank’s establishment, including:

• Rs 10 billion as seed capital
• Rs 2 billion for operationalisation

The bank will operate strictly under the regulatory framework of the State Bank of Pakistan (SBP), which has outlined a clear sequence of steps before the institution becomes fully operational.

Regulatory Process and SBP Approval

In a preliminary meeting between the Finance Department and SBP’s Banking Policy and Regulations Department, the central bank confirmed that no special legislation is required for the bank’s establishment. However, formal approval from the provincial government and placement of the seed capital must be completed before SBP begins its regulatory process.

Once cabinet approval is formally communicated, SBP will:

1. Review and approve the bank’s business plan.
2. Issue a No-Objection Certificate (NOC) to allow registration with the Securities and Exchange Commission of Pakistan (SECP).
3. Initiate a phased regulatory procedure, including inspections and fulfillment of additional requirements.
4. Issue a provincial banking license after all conditions are met.

Limited Operations Before Full Launch

According to SBP’s roadmap, the bank will initially operate on a limited, pilot basis, offering basic services such as government deposits, salary accounts, and other low-risk services. After observing performance for three to six months, SBP may permit expansion into full-fledged banking operations.

Officials cautioned that the bank may incur losses during the first two to three years before reaching a breakeven point. No discretionary loans or write-offs will be allowed, ensuring the bank operates under strict SBP regulations without political influence in lending decisions.

Board Structure and Recruitment

Until private investors join, the proposed board will include nine members:

• President/CEO (also acting as bank president)
• Four Executive Directors
• Four Independent Non-Executive Directors

All appointments, including the CEO, will be made by the provincial government based on nominations from a selection committee consisting of:

• Chief Secretary (Chairman)
• Additional Chief Secretary (Planning & Development)
• Secretary Finance
• Secretary Services and General Administration
• SBP representative (Director or Additional Director level)

The Chief Minister emphasized that all appointments will be merit-based. Screening and shortlisting of candidates will be outsourced to an independent national-level HR firm experienced in hiring C-suite executives.

18-Month Timeline for Completion

According to SBP’s projected timeline, the entire process—from cabinet approval to issuance of a provincial banking license—is expected to take approximately 18 months. This includes:

• Submission and approval of the business plan
• Licensing formalities
• SECP registration
• Board appointments
• Placement of Rs 10 billion seed capital in the 2026–27 provincial budget

Addressing a Long-Standing Gap

Balochistan remains Pakistan’s most underserved province in terms of financial infrastructure. Large segments of the population—including traders, farmers, and small businesses—have limited access to credit, savings, and investment opportunities. The new public-sector Islamic bank aims to address this gap by offering services tailored to the province’s economic realities.

Provincial leadership believes the bank will play a pivotal role in supporting economic activities across agriculture, fisheries, livestock, mining, and small industries while ensuring transparent and strategic use of provincial resources.

With formal cabinet approval now granted, the Bank of Balochistan moves into its implementation phase. Authorities describe this as a “historic development” for Balochistan’s financial future, marking a long-awaited step toward strengthening provincial financial independence and inclusive economic growth.