By Farooq Awan

Pakistan upgraded its financial market infrastructure in 2025 through the implementation of advanced payment and settlement systems, according to the Financial Stability Review 2025 released by the State Bank of Pakistan (SBP).

The report indicates that a key development during the year was the rollout of PRISM+, a next-generation platform designed to enhance the efficiency, capacity, and resilience of large-value payment processing in the country. The system improved the speed and reliability of interbank settlements, ensuring smoother execution of high-value financial transactions and strengthening the overall payments ecosystem.

In addition to payment system upgrades, Pakistan’s capital market infrastructure improved with the transition to a T+1 settlement cycle. The shift to one-business-day trade settlement reduced the time required to complete securities transactions, aligning the country’s practices with international standards and improving operational efficiency in the equity market.

The SBP noted that these developments played a crucial role in enhancing the performance of financial market infrastructure, which continued to function smoothly throughout 2025 despite increasing transaction volumes. Payment systems handled higher values and volumes of transactions compared to previous years, reflecting growing economic activity and expanding use of formal financial channels.

The report highlights that improvements in financial infrastructure are essential for supporting financial stability and economic growth. Efficient payment and settlement systems reduce transaction risks, enhance liquidity management, and improve confidence among market participants.

The introduction of PRISM+ also strengthened the central bank’s ability to monitor and manage payment system operations more effectively. By leveraging modern technology, the platform enhanced transparency and reduced operational risks, contributing to a more secure and efficient financial environment.

The transition to faster settlement systems in capital markets further improved market liquidity and reduced counterparty risk. By shortening the settlement cycle, investors were able to access funds more quickly, which supports higher trading activity and better price discovery in financial markets.

The report also notes the launch of Pakistan’s first motor insurance repository, aimed at improving transparency, strengthening underwriting practices, and reducing fraud in the insurance sector. This initiative reflects broader efforts to modernize financial infrastructure across different segments of the financial system.

Despite these advancements, the SBP emphasized the importance of continued investment in infrastructure to keep pace with growing transaction volumes and evolving technological requirements. Ensuring system resilience, particularly in the face of cybersecurity risks, remains a key priority for regulators and financial institutions.

The upgrades introduced in 2025 reflect ongoing efforts to align Pakistan’s financial infrastructure with global best practices, improve efficiency, and support the smooth functioning of financial markets.

Credit: INP-WealthPk