SBP orders TAG to make full refunds to depositors. What does this mean for the troubled fintech startup? 24

SBP orders TAG to make full refunds to depositors. What does this mean for the troubled fintech startup?

State Bank has ordered more corrective actions than just refunding money to wallet customers

By Taimoor Hassan & Babar Nizami

The State Bank of Pakistan (SBP) has ordered Pakistan’s fintech TAG Innovation to initiate refunds to customers. Despite that it may seem that TAG Innovation might be going towards a complete cessation of operations, it might not be entirely accurate because the State Bank has ordered more corrective actions than just refunding money to wallet customers.

On August 4, the central bank said in a press release that TAG Innovation had been ordered to initiate refunds to customers, with a hard deadline to complete the refunds by August 19. However, the original letter sent to TAG Innovation requesting this action also asked TAG Innovation to completely disassociate from co-founders Talal Ahmed Gondal and Ahsan Kaleem Khan, multiple sources privy to the contents of the letter, told Profit.

Even though the State Bank also said that it would review the fit-and-proper test of both the co-founders, sources claimed that to satisfy the SBP, divestment of the shareholding of the two co-founders would also be necessary. Both co-founders currently have no direct shareholding in TAG Innovation, which is owned 100% by TAG Fintech in the US.

In TAG Fintech, Talal Gondal owns the majority shareholding and recently stripped the other co-founder, Ahsan Khan, of shareholding on grounds of alleged misconduct.

The move by the central bank, coming after months of a probe into the startup, appears to be a measured one to keep the startup afloat while taking punitive action against persons allegedly responsible for the misconduct that led to the SBP action of first suspending TAG’s pilot operations and then ordering refunds to customers.

According to a source, the actions that led to TAG Innovation in Pakistan’s troubles were initiated when a doctored document was submitted to the central bank by TAG Fintech when it initiated a bid to acquire a majority stake in SAMBA Bank. According to the