From big bank mergers and crypto regulation to new digital banks and Islamic microfinance, 2025 reshaped Pakistan’s banking and financial landscape.
A Year of Deals, New Players and Tough Competition
Pakistan’s banking and financial sector saw major shifts in 2025, with mergers, new licences, foreign expansion and closures all taking place in a single year. Competition intensified between traditional banks and agile fintechs, but the institutions that combined innovation with strong business models took the lead in both market presence and profitability.
The year also marked important milestones in Islamic banking, digital payments, microfinance and crypto regulation, setting the stage for deeper financial inclusion and more diverse products for consumers and businesses.
Big Mergers, Acquisitions and New Digital Banks
One of the most notable deals of 2025 was the merger and amalgamation of Silk Bank into United Bank Limited (UBL). The transaction removed a loss-making player from the system and supported sector-wide consolidation, which many analysts see as essential for long-term stability and growth.
Another headline transaction was fintech firm ABHI’s acquisition of FINCA Microfinance Bank, in partnership with TPL Corp. The bank was rebranded as ABHI Microfinance Bank, making it a rare example of a fintech taking a controlling stake in a regulated microfinance institution to expand its local and international footprint.
At the same time, new digital banks began commercial operations. Mashreq Bank and Easypaisa were among the first licensed digital retail banks to go live under the State Bank’s digital banking framework. Both operators are targeting Pakistan’s still largely unbanked population with app-based accounts and branchless services.
Fintechs Expand Abroad and Crypto Platforms Enter Pakistan
Fintech activity was not limited to Pakistan’s borders. ABHI expanded across Pakistan, the UAE and Bangladesh and entered the Kingdom of Saudi Arabia through a partnership with Alraedah Digital Solutions and agreements with Tray and AlBauyt. This made ABHI one of the few Pakistan-based fintechs with an active presence in Saudi Arabia.
Haball, a PSP/PSO operator, raised about US$52 million in equity and debt and scaled up its Shariah-compliant supply chain finance platform, Wisaaq, including SME lending in Saudi Arabia. Its funding combined equity from Zayn VC with strategic financing from Meezan Bank, showing how local banks and fintechs can work together.
On the virtual assets side, the federal government moved to legalise crypto-related business by setting up the Pakistan Virtual Assets Regulatory Authority (PVARA). Global exchanges such as Binance and HTX received NOCs to pursue licences, set up local entities and explore tokenisation of up to US$2 billion in sovereign bonds, T-bills and commodity reserves. Experts see this as a signal that Pakistan could attract new foreign investment even as some multinationals scale back their local operations.
Islamic Banking and Microfinance Gain Momentum
Islamic banking continued to expand across both commercial banks and microfinance institutions. Samba Bank secured regulatory approval to convert into a full-fledged Islamic bank, while the Bank of Khyber took concrete steps towards complete Shariah conversion with the necessary clearances. UBL also converted all of its operations in Khyber Pakhtunkhwa and Balochistan to Islamic banking.
In microfinance, Halan Microfinance Bank, a subsidiary of Egypt-based MNT-Halan, received a nationwide licence after acquiring and rebranding Advans Pakistan in 2024. In 2025, it focused on digital banking, mobile wallets, cards and Buy Now, Pay Later (BNPL) products.
Mobilink Bank launched Islamic banking operations, allowing JazzCash to offer Shariah-compliant services through dedicated Islamic branches and windows. LOLC Microfinance Bank opened its first Islamic microfinance branch in Islamabad, while ASA Microfinance Bank secured in-principle approval to introduce Islamic products. Earlier, NRSP Bank and U Microfinance Bank had also moved into Shariah-compliant offerings, signalling a broader shift towards Islamic finance across the low-income market.
New Payment Infrastructure, Financial Inclusion and Market Exits
On the infrastructure front, the State Bank of Pakistan launched PRISM+ (Pakistan Real-Time Interbank Settlement Mechanism Plus) in June 2025. The upgraded platform supports real-time settlement and acts as a central securities depository for government securities auctions, secondary market trading, collateral management and open market operations, improving transparency and automation in the financial system.
The central bank also introduced Pakistan’s Financial Inclusion Index (P-FII), built on 69 indicators that measure access to, usage of and quality of financial services across banking, non-banking and payment providers. The index is intended to help policymakers track progress and identify gaps in financial inclusion.
Despite the positive momentum, 2025 also saw closures and exits. SME Bank Limited was de-scheduled after its liquidation under an Islamabad High Court order, with the State Bank acting as official liquidator. Savyour, the country’s only cashback fintech, shut down despite raising US$3.3 million in seed funding and paying out more than Rs400 million in rewards to four million users. Rising competition in BNPL and e-commerce made its business model difficult to sustain.
High Policy Rates Kept Pressure on Borrowers
Monetary policy remained tight for most of the year. The State Bank’s Monetary Policy Committee kept the policy rate at 11 percent until the third quarter of 2025, despite persistent calls from the business community for easier credit conditions. Only in the final decision of the year did the committee cut the rate by 50 basis points to 10.5 percent, which is still higher than benchmark rates in regional peers such as India and Bangladesh.
High borrowing costs limited credit demand and kept pressure on borrowers, but they also helped anchor inflation expectations and maintain financial stability during a period of economic adjustment. With new players entering, legacy institutions consolidating and regulation catching up with technology, 2025 will likely be remembered as a turning point for Pakistan’s banking and financial sector.
