State Bank of Pakistan grants in-principle approvals to five digital banks, paving the way for Fintech expansion

Morning! Yesterday was National Binge Day and we thought it was… everyday?? Nvm 😬

In this week’s edition:

🏛️ Government shutdown 101

💎 Shine bright like a diamond

⚔️ From ‘Battle of Bastards’ to ‘Battle of AI’

💵 Pak’s fantastic 5

- The Itla Squad 💼

Business

Global 🌎️

Welcome to Government Shutdown 101

If Congress doesn't come through with funding for the fiscal year starting on October 1, we might be looking at a U.S. government shutdown, causing a real mess for various important services and hundreds of thousands of federal workers.

What is a government shutdown? A government shutdown occurs when Congress fails to pass legislation for funding, which must be signed by the president. Ideally, Congress should pass a bunch of spending bills (about 12 of them) to fund different government agencies, but this process can be time-consuming. So, they often use temporary fixes called continuing resolutions (CRs) to keep things running.

Impact on US: In the event of a government shutdown, the military remains active, border security continues, and courts may scale back, while Congress operates without pay for staff. Transportation services face challenges, but healthcare services remain uninterrupted. Economic data publications come to a halt, but Social Security, Medicare, and tax collection persist. Education may be disrupted, and small business support may cease. The U.S. Postal Service maintains normal operations, but economic impacts could be marginal, potentially impacting economic growth during the shutdown.

Impact on world: A potential US government shutdown can trigger global market turbulence. Financial markets, like stocks and currencies, closely tied to the US, may see increased volatility due to the uncertainty. The US dollar, being the world's primary reserve currency, could weaken as investors seek safer alternatives, affecting exchange rates and trade balances. Furthermore, disruptions in US trade agencies during a shutdown may ripple through global supply chains and trade agreements, causing widespread consequences.

Has it ever happened? Yes, 21 times exactly in the past five decades with the most recent shutdown occurring in 2018-2019, lasting 35 days, mainly due to funding disputes related to the U.S.-Mexico border wall.

TLDR: If Congress doesn't secure funding by October 1, a U.S. government shutdown could disrupt services and federal workers. This happens when Congress can't pass funding bills and resorts to temporary fixes. In a shutdown, the military remains active, some services scale back, and economic data publication stops. Global markets may see turbulence.

What else is new in news

✶ Singapore-based food delivery company Foodpanda has confirmed its latest round of layoffs, stating that the need for increased agility remains a top priority.

Local 🇵🇰

🎵 Shine bright like a diamond (SBP Version) 🎵

The State Bank of Pakistan (SBP) has unveiled the 'Diamond' category in the Sohni Dharti Remittance Program (SDRP), offering added perks to overseas Pakistanis using formal remittance channels.

Why the fuss with the category? Pakistan's economy, always often grappling with financial challenges, heavily relies on foreign remittances, hitting an impressive $27 billion in FY23, largely contributed by Saudi Arabia and the UAE.

Decoding SDRP: It is a point-based loyalty scheme designed for overseas Pakistanis who send money through regulated channels. While it began with Green, Gold, and Platinum categories, the mysterious Diamond category is now in play, with the remittance threshold remaining undisclosed.

The Perks of the Diamond Category: Diamond category participants are set to enjoy an array of benefits, including:

• Arms License for non-prohibited bore arms.

• VIP Treatment at Pakistan's embassies and airports.

• Complimentary Passports, free of charge.

Redeeming reward points: Accumulated reward points open doors to various complimentary products and services, such as:

• Emigrant Registration Fee waived at the Bureau of Emigration & Overseas Employment.

• Duty Relief for imported mobile devices and vehicles through the Federal Board of Revenue.

• Simplified school fee payments via Overseas Pakistanis Foundation (OPF).

• Discounts on international airfare and extra baggage fees with Pakistan International Airlines.

TLDR: The State Bank of Pakistan (SBP) has introduced a 'Diamond' category in its Sohni Dharti Remittance Program (SDRP) for overseas Pakistanis, offering extra perks through official channels. This tier provides benefits like arms licenses, embassy/airport privileges, and free passports. Accumulated reward points unlock perks, including waived fees, duty relief, simplified school payments, and discounts on airfare with Pakistan International Airlines.

News Flash

✶Pakistani banks are doing well in the anti-corruption department but need to up their game on human rights policies, says a report by Fair Finance Pakistan, a coalition of groups pushing for better standards in the financial industry.

Tech

Global 🌎️

From ‘Battle of the Bastards’ to ‘Battle of the AI’

In a plot twist worthy of a bestseller, authors like George R.R. Martin, John Grisham, Jodi Picoult, and have united under the banner of the Authors Guild to sue OpenAI for alleged copyright infringement. Their gripe? They claim OpenAI's ChatGPT product has been using their words to churn out unauthorized content and relies on "systematic theft on a mass scale" to function.

The AI perspective: OpenAI isn't backing down, asserting their respect for writers' rights while eagerly searching for common ground. They're arguing that AI, far from being a villain, could actually benefit writers

More players in the ring: Authors aren't the sole players in the fight against AI. Earlier this year, visual artists took a stand, accusing organizations like Midjourney and AI art generators of violating the rights of "millions of artists." They argue that these AI tools were trained on a staggering five billion images scraped from the web, all without the consent of the original artists.

Zooming out: Beyond the courtroom drama, this case raises questions not just about copyright but also about what this generative AI boom can mean for artists. Balancing innovation in this age of technological progress with fair compensation for creators is the ultimate plot twist in this story.

TLDR: Authors, including George R.R. Martin and John Grisham, are suing OpenAI, alleging ChatGPT uses their work without permission. OpenAI defends itself, claiming AI can benefit authors. This echoes a broader trend where artists challenge AI's use of their creations, raising questions about copyright and fair compensation in the AI era.

What else is new in news

✶Microsoft recently concluded its September event, where it announced significant news. Aside from the fresh Surface gear, Microsoft spilled the beans on upcoming AI stuff for their products.

Local 🇵🇰 

Pakistan’s fantastic 5

In a significant move, the State Bank of Pakistan (SBP) awarded In-Principle Approvals (IPAs) to five proposed digital banks in Pakistan. These banks include HugoBank Pakistan, KT Bank Pakistan Limited, Mashreq, Raqami Islamic Digital Bank, and Telenor Microfinance Bank.

Why do digital retail banks matter? Governor SBP emphasized the importance of introducing Digital Retail Banks (DRBs) in Pakistan, highlighting their potential benefits to the financial system. These institutions are expected to play a vital role in enhancing financial inclusion and economic growth.

Aren’t digital banks the same as e-wallets? Yes and no. Both let you pay bills, top up your phone, and shop online without cash. But digital banks go further, providing bank accounts and cards for online and offline spending, along with additional banking services. E-wallets, on the other hand, mainly focus on online payments and require linking to a bank account or card and that's pretty much all they do – help you pay online.

What’s next? All digital retail banks now have 12 months to prepare operationally. Upon reaching operational readiness, they will seek SBP approval to commence their operations. This marks a significant step towards a digitally empowered future of banking in Pakistan.

TLDR: The State Bank of Pakistan (SBP) has given the green light to five digital banks in Pakistan, including HugoBank, KT Bank, Mashreq, Raqami, and Telenor Microfinance Bank. These digital banks aim to boost financial inclusion and economic growth. These banks have a year to get ready before launching their operations, marking a significant step towards a digital future for banking in Pakistan.

Tech tour of news

✶ Pakistan's government is raising a red flag on using Indian-made products and services in its industry, fintech, and banking sectors. They're worried about potential data theft, cyber-attacks, and system hacking.

More interesting Itla (اطلاع) we consumed:

📩 Do thoughts like ‘I'll never find true love because I'm not attractive enough' or 'I can't travel and see the world because it's too expensive' cross your mind? Then, this Ali Abdaal newsletter’s edition is a must-read. Drawing from his experience at Tony Robbins' event, he introduces a practical 4-step method to work through these self-limiting beliefs.

🎥 Rewatched an episode of BoJack Horseman on Netflix, an adult animated psychological comedy-drama series, and was reminded why it easily ranks in our top 3 television series of all time. The series is funny, witty, captivating, and heartbreaking at the same time, so give it a watch. Fun fact: one of the main characters is voiced by Aaron Paul, aka Jesse Pinkman from Breaking Bad.