South Asia

India's public rails, Pakistan's Islamic shift and Bangladesh's mobile money

This edition covers banking in South Asia, led by India, with Pakistan, Bangladesh, Sri Lanka and Nepal; Bhutan, the Maldives and Afghanistan complete the region. Public instant rails such as UPI and Raast, mobile money, microfinance and large state banks shape everyday banking, and Islamic banking is systemically important in Pakistan and Bangladesh.

Compare the regions

MumbaiGIFT CityNew DelhiKarachiDhaka

At a glance

24.07 billionUPI transactions in India in September 2026 (NPCI)

2.76 billionRaast instant payments in Pakistan, July 2025 to June 2026 (SBP)

450 million+Account Aggregator consents given in India by March 2026 (Sahamati)

29.2%Islamic banking's share of Pakistan's bank deposits, June 2026 (SBP)

South Asia

The markets

India

Indian rupee (INR) · Mumbai · GIFT City · Bengaluru

Central bank: Reserve Bank of India (RBI): monetary policy, regulation of banks and NBFCs, and oversight of payment systems
Supervisors: RBI for banks and NBFCs; NABARD with the RBI for rural co-operative banks; SEBI for securities; IRDAI for insurance; IFSCA for GIFT City
Payment rails: UPI (24.07 billion transactions in September 2026), IMPS and NACH run by NPCI; NEFT and RTGS run around the clock by the RBI
Open finance: Account Aggregator framework (live since 2021): RBI-licensed aggregators carry consented financial data; the DPDP Act 2023 and Rules 2025 add data-protection duties
Deposit protection: DICGC: up to ₹5 lakh (₹500,000) per depositor per bank, covering commercial, small finance, payments and co-operative banks
Digital banks: No digital-bank licence; small finance banks and payments banks are differentiated licences, and neobanks work through partner banks
Islamic finance: No Islamic banking: in 2017 the RBI decided not to pursue interest-free banking. Shariah-screened equity funds and indices exist

Pakistan

Pakistani rupee (PKR), market-based exchange rate · Karachi · Lahore · Islamabad

Central bank: State Bank of Pakistan (SBP): monetary policy and regulation of banks, microfinance and digital banks, e-money firms and payments
Supervisors: SBP for banks, microfinance banks and payments; Securities and Exchange Commission of Pakistan (SECP) for capital markets, insurance, NBFCs and digital lenders
Payment rails: Raast instant payments (since 2021, run by an SBP subsidiary), the 1LINK switch and PRISM+ RTGS on ISO 20022 (2025)
Open finance: No open-banking framework yet; open-banking firms test in the SBP regulatory sandbox, whose first cohort was chosen in January 2026
Deposit protection: Deposit Protection Corporation, an SBP subsidiary: up to PKR 1,000,000 per depositor per bank
Digital banks: SBP digital-bank framework (2022): Mashreq Bank Pakistan became a scheduled bank in September 2025 and Raqami Islamic Digital Bank in February 2026
Islamic finance: 23.7% of banking assets and 29.2% of deposits (SBP, June 2026); seven Islamic banks plus Islamic branches of 16 others; riba to end by 2028

Bangladesh

Bangladeshi taka (BDT) · Dhaka · Chattogram

Central bank: Bangladesh Bank: monetary policy and supervision of banks, finance companies, mobile financial services and payment systems
Supervisors: Bangladesh Bank for banks, finance companies and payments; Microcredit Regulatory Authority (MRA) for NGO microfinance; BSEC for securities; IDRA for insurance
Payment rails: NPSB interbank switch (2012), BEFTN, BD-RTGS, Bangla QR and the TakaPay card scheme (2024); mobile money from 14 providers, incl. bKash
Open finance: No open-banking framework yet; the Personal Data Protection Ordinance 2025 sets consent rules and data rights for customers
Deposit protection: Deposit Protection Ordinance 2025: up to Tk 200,000 per depositor, double the old limit, with a separate fund for finance companies
Digital banks: Digital-bank guidelines (2023, revised 2025): Nagad's 2023 approval was suspended in 2024, and a new application round ran in September 2025
Islamic finance: 22.5% of banking assets (IFSB, Q3 2024); Islami Bank Bangladesh leads; five weak Islamic banks are being merged into Sammilito Islami Bank

Sri Lanka

Sri Lankan rupee (LKR), flexible exchange rate · Colombo

Central bank: Central Bank of Sri Lanka (CBSL): monetary policy and supervision of banks, finance companies and payments; independent by law since 2023
Supervisors: CBSL for banks, finance and leasing companies, microfinance and payments; SEC Sri Lanka for capital markets; IRCSL for insurance
Payment rails: LankaPay runs CEFTS real-time transfers, LankaQR, JustPay and GovPay (2025); CBSL runs the LankaSettle RTGS
Open finance: No open-banking framework yet; the Personal Data Protection Act No. 9 of 2022, amended in 2025, is being brought into force
Deposit protection: Sri Lanka Deposit Insurance Scheme (CBSL, since 2010): up to LKR 1,100,000 per depositor per institution
Digital banks: No separate digital-bank licence; licensed banks run digital-only brands, such as FriMi from Nations Trust Bank
Islamic finance: About 0.9% of banking assets (IFSB, Q3 2024); Amana Bank is fully Islamic, and some banks and finance companies run Islamic windows

Nepal

Nepalese rupee (NPR), pegged to the Indian rupee · Kathmandu

Central bank: Nepal Rastra Bank (NRB): monetary policy, foreign exchange and regulation of banks and financial institutions in classes A to D and payment providers
Supervisors: NRB for banks, finance companies, microfinance and payments; SEBON for securities; Nepal Insurance Authority; Department of Cooperatives for co-operatives
Payment rails: Nepal Clearing House runs connectIPS, NCHL-IPS and NEPALPAY QR; NRB hosts RTGS; QR links reach India's UPI and LankaQR
Open finance: No open-banking framework; NRB payment rules and the Individual Privacy Act 2018 govern how customer data is used
Deposit protection: Deposit and Credit Guarantee Fund: up to NPR 500,000 per individual depositor at NRB-licensed institutions
Digital banks: No digital-bank licence; banks offer mobile banking, and NRB-licensed wallets such as eSewa and Khalti lead everyday digital payments
Islamic finance: No Islamic bank or dedicated Islamic banking framework; customers are served by conventional banks and financial institutions

How banking is organised in South Asia

Each market has one central bank that licenses and supervises its banks, with separate regulators for securities and insurance and, in Pakistan and Bangladesh, parts of non-bank finance. State-owned banks remain large in India, Bangladesh and Sri Lanka, and specialised licences serve rural and small customers.

India: public sector banks led by State Bank of India sit beside private banks such as HDFC Bank and ICICI Bank, plus small finance, payments, rural and co-operative banks and NBFCs.
Pakistan: large private banks such as HBL sit beside the state-owned National Bank of Pakistan; the SBP regulates banks and payments, and the SECP regulates non-bank finance.
Bangladesh: state-owned commercial banks such as Sonali Bank, private and Islamic banks, and NGO microfinance under the MRA; Bangladesh Bank is restructuring weak banks.
Sri Lanka and Nepal: state banks such as Bank of Ceylon lead in Sri Lanka; Nepal groups its institutions in classes A to D, from commercial banks to microfinance.
Also in the region: Bhutan (Royal Monetary Authority), the Maldives (Maldives Monetary Authority) and Afghanistan (Da Afghanistan Bank).

Payments and open finance

Every market runs an instant rail: UPI in India, Raast in Pakistan, NPSB in Bangladesh, CEFTS in Sri Lanka and connectIPS in Nepal. Shared operators run the rails, and banks and apps compete on top. India's Account Aggregators are the region's only live open-finance framework.

India's UPI processed 24.07 billion transactions worth ₹29.37 lakh crore in September 2026, about 800 million a day (NPCI).
Pakistan's Raast handled 2.76 billion payments in the year to June 2026, with 49.2 million personal IDs and 3.6 million merchants (SBP).
Cross-border QR links are growing: India's UPI is accepted in Nepal, Bhutan and Sri Lanka, and Nepali travellers can pay at LankaQR merchants (2026).
Open finance: India's Account Aggregators passed 450 million consents by March 2026 (Sahamati); Pakistan tests open banking in its sandbox; elsewhere it is early.

Fintech, digital banks and mobile money

India's fintechs build on UPI and Account Aggregators under RBI rules for payment aggregators and digital lending. Pakistan has licensed its first digital banks, Bangladesh leads in mobile money, and Nepal's licensed wallets drive QR payments. Most markets have no separate digital-bank licence.

India: no digital-bank licence; small finance and payments banks, such as Airtel Payments Bank and India Post Payments Bank, gave new entrants a route in.
India's digital lending rules make banks and NBFCs answer for the apps and partners they use, with loans paid straight to borrowers and a key fact statement on cost.
Pakistan: the SBP cleared five digital-bank applicants in 2023; Mashreq Bank Pakistan (2025) and Raqami Islamic Digital Bank (2026) now operate as scheduled banks.
Bangladesh's mobile money, led by bKash, Nagad and Rocket, had about 239 million registered accounts in February 2025 (Bangladesh Bank).

Rules a bank must map here

Banks apply Basel III capital and liquidity rules, AML/CFT laws assessed by FATF and the Asia/Pacific Group (APG), data and consumer rules, and Islamic-bank rules in Pakistan and Bangladesh. Nepal has been under FATF increased monitoring since February 2025; Pakistan left that list in October 2022.

India: RBI IT governance Master Direction (in force since April 2024), digital payment authentication directions (from April 2026) and expected-credit-loss provisioning planned from April 2027.
India also: the Digital Personal Data Protection Act 2023, with Rules notified in November 2025 and an 18-month phase-in, and anti-money laundering duties with FIU-IND.
Pakistan: Banking Companies Ordinance 1962, the SBP Shariah Governance Framework (2024), the AML Act 2010 with the Financial Monitoring Unit, and SBP technology-risk rules for payment firms (2025).
Bangladesh: the Bank Company Act 1991, the Money Laundering Prevention Act 2012 with BFIU as financial intelligence unit, and 2025 ordinances on deposit protection and personal data.
Sri Lanka and Nepal: the CBSL Act 2023, the Banking Act and the Banking (Special Provisions) Act 2023 on resolution; in Nepal, the Bank and Financial Institutions Act and a FATF action plan.

What operations teams wrestle with

Volumes on instant rails grow every month while cash, agents and branches stay busy, so teams run digital and physical channels together. Scams and mule accounts, disputes at scale, biometric onboarding, remittances and the clean-up of weak banks shape the daily work.

Disputes and failed payments at UPI and Raast scale need automated reversals, clear turnaround times and root-cause fixes in the bank's own systems.
Scams and mule accounts: India requires two-factor authentication on digital payments from April 2026, with risk-based checks on suspicious transactions.
Biometric identity at scale: Aadhaar e-KYC in India and NADRA checks in Pakistan speed onboarding but need consent records, data minimisation and fraud controls.
Remittances are a lifeline: FATF asks Nepal to curb illegal hundi transfers without hurting inclusion, so formal channels must be fast and cheap.

How SMEs get financed

Banks lead, steered by central-bank lending targets, refinance windows and public guarantees. Microfinance runs deep: Bangladesh is home to Grameen Bank and large NGO lenders. Non-bank lenders and fintechs add leasing, invoice finance and cash-flow lending.

India: priority-sector targets steer 40% of most banks' credit to priority areas; CGTMSE guarantees, SIDBI refinance, MUDRA loans and TReDS invoice platforms add support.
Pakistan: SBP refinance and guarantee schemes and the Prime Minister's Youth Business and Agriculture Loan Scheme support SMEs; SECP-licensed NBFCs add leasing and digital credit.
Bangladesh: Bangladesh Bank sets CMSME lending targets and refinance funds; PKSF funds NGO lenders licensed by the MRA, and Grameen Bank serves rural borrowers.
Sri Lanka and Nepal: finance and leasing companies fund vehicles and equipment in Sri Lanka; NRB requires banks to lend set shares to priority and deprived sectors.

Islamic finance: an eye opener

Islamic finance: deep markets and open ground

Islamic banking is systemically important in Bangladesh and Pakistan, where it holds more than a fifth of banking assets, and significant in the Maldives and Afghanistan. Pakistan's constitution now aims to end riba by 1 January 2028. Sri Lanka has a small Islamic sector, and India and Nepal have no Islamic banks.

Islamic share of banking assets (IFSB, Q3 2024): Bangladesh 22.5%, Pakistan 18.7%, Maldives 13.5%, Afghanistan 12.4%, Sri Lanka 0.9%.
Pakistan, June 2026 (SBP): 23.7% of assets and 29.2% of deposits; seven Islamic banks, incl. Raqami Islamic Digital Bank, and 7,757 Islamic branches.
Pakistan's 2024 constitutional amendment sets 1 January 2028 to end riba as far as practicable; government Hybrid Sukuk raised about PKR 1.09 trillion from April to June 2026.
Bangladesh: Islamic banking since Islami Bank Bangladesh opened in 1983; five weak Islamic banks are being merged into the state-owned Sammilito Islami Bank.

What it offers everyone

Customers

Millions who avoid interest gain a formal route to finance a home, a vehicle or stock. The price and total due are fixed at signing, financing is tied to a real asset, and late-payment charges go to charity, so the cost does not compound.

Banks and financiers

Asset-backed and trade-linked financing keeps balance sheets close to the real economy, profit-sharing deposits align returns with performance, and new segments open, from Pakistan's conversion drive to Bangladesh's rural savers.

Savers and investors

Returns come from real activity through profit-sharing accounts and sukuk backed by state assets or projects, with ethical screening; Pakistan's government sukuk give banks and savers a growing Shariah-compliant home for liquidity.

The economy

Credit follows real trade and assets, debt is not sold on as debt, and excessive speculation is excluded. That ties finance to production, widens inclusion for people who avoid interest and channels savings into infrastructure.

A concrete opening: Pakistan's 2028 goal means many banks must convert products, contracts, core systems and staff skills within a few years. Shariah-governed process maps, product templates and training for whole teams are a practical opening.

Working with banking teams here

Working with banking teams in South Asia

Relationships and respect come first: expect tea, warm hospitality and interest in who you are before the detail. Seniority matters, and large state-owned banks decide through senior leaders and committees. English is the working language of most banking documents. These are common norms; individuals differ.

Common norms; individuals differ.

Address people by title and surname until invited otherwise, and let the most senior person open and close the meeting.
Courtesy can soften a no: phrases such as 'we will try' may signal doubt, so confirm decisions, owners and dates in writing.
Languages are many: India alone lists 22 scheduled languages, and Urdu, Bengali, Sinhala, Tamil and Nepali lead elsewhere; plain, clear English helps everyone.
Working weeks differ: Sunday to Thursday in Bangladesh, Sunday to Friday in Nepal, and Monday to Friday in most other markets, with some Saturday banking in India.

Learning from each other

What the GCC can learn from South Asia

From India: public digital rails, UPI and Account Aggregators, that let every bank and app reach customers at very low cost.
From Pakistan: an instant rail owned by the central bank, Raast, and a whole banking system planning its move to Islamic finance by 2028.
From Bangladesh: mobile money and microfinance that reach rural households and small traders at national scale.

What South Asia can learn from the GCC

Islamic finance at scale: Shariah governance, AAOIFI standards and deep sukuk markets that can support Pakistan's conversion and Bangladesh's clean-up of weak Islamic banks.
Digital-bank licensing carried from rules to launch, and open banking delivered through licensed providers and central hubs.
Sector-wide skills programmes, such as the Financial Academy in Saudi Arabia, that build banking talent at national scale.

The other regions

GCCIslamic finance at scale, national instant rails and regulators that move fast MENAEgypt's scale, Jordan's shared rails and Morocco's bridge to Africa EuropeWhere global banking rules are written: a banking union, a single rulebook and instant euro payments by law UK & wider EuropeLondon's rulebook, Swiss and Norwegian rails, Türkiye's scale and Ukraine's resilience North AmericaDeep markets, many banks and payment rails modernising across three economies Latin America & CaribbeanBrazil's Pix, Colombia's Bre-B and open finance set by rule Sub-Saharan AfricaSouth Africa's instant rails, Kenya's mobile money, West Africa's shared central bank Central Asia & CaucasusKaspi's super app, Astana's financial centre and new Islamic windows East & Southeast AsiaScale, speed and public rails: five markets setting the pace of digital banking Australia & NZTrans-Tasman banking: real-time rails, data rights and firm conduct rules Compare the regionsAll eleven regions in one table

South Asia

At a glance

The markets

How banking is organised in South Asia

Payments and open finance

Fintech, digital banks and mobile money

Rules a bank must map here

What operations teams wrestle with

How SMEs get financed

Islamic finance: deep markets and open ground

What it offers everyone

Working with banking teams in South Asia

What the GCC can learn from South Asia

What South Asia can learn from the GCC

Further reading