RDA success inspires many countries to seek guidance: SBP deputy governor

Web DeskWeb Editor

28th Jun, 2021. 04:40 pm
State Bank announces implementation

KARACHI: Several countries are approaching Pakistan; following the success of the Roshan Digital Account (RDA) initiative, a government official said on Monday.

Speaking at a webinar on “Pakistan’s Investment Landscape, Roshan Digital Account, Journey Towards a Naya Pakistan”, State Bank of Pakistan (SBP) Deputy Governor (Policy) Dr Murtaza Syed said that as many as 177,980 Roshan Digital Accounts have been opened by the overseas Pakistanis from around 171 countries of the world, depositing $1.5 billion funds so far.

“We have created something quite special. In fact, many other countries are reaching out to us, having seen the success of the Roshan Digital Account to try to understand how we went about it; how we implemented various mechanisms that had never been done before,” he said.

This idea of digitally onboarding customers that don’t actually live in that particular jurisdiction was not a very easy thing to do; he said, adding that the most emerging markets don’t actually have a mechanism like this.

The central bank had to put in new regulations to allow this kind of presence-less onboarding of customers and enable overseas Pakistanis to be able to open a bank account in Pakistan. “This doesn’t exist before and doesn’t exist for many countries,” he added.

Syed said that earlier, the Pakistani diaspora was frustrated for not having proper connectivity to the Pakistani banking system and have control over their funds, adding that last year, when Prime Minister Imran Khan directed for connecting the overseas Pakistanis, the SBP came with the RDA initiative after removing the bottlenecks and adopting latest technology.

Syed also said that the amount deposited in RDA could be fully repatriated and the accountholder could withdraw money any time he/she wants. The customers had already been successfully using this facility, he added.

Another special feature of the RDA was that the account holder does not have any dealing with the Federal Board of Revenue. Thirdly, the SBP deputy governor said, the freezing of foreign accounts in 1998 still haunts people and makes them skeptical.

However he assured that this could not happen again, as proper legislation has been done, in this regard, so freezing foreign accounts would be illegal.

In addition, the current scenario was very different from 1998, as the country was moving towards economic stability with the current account witnessing a surplus during the last 11 months from the deficit of $20 billion, flexible and stable exchange rate, forex reserves $16 billion at four years high.

Syed also lauded the government for properly handling the Covid-19 situation and success of the Ehsaas programme. He said the growth rate for the current year (2020/21) is expected at 4 per cent and 5 per cent in the next year (2021/22).
Unlike in the past, when the growth was consumption-led and import-driven; this time it would be investment and export-led growth, he added.

Consul-General of Pakistan at Los Angeles, US, Abdul Jabbar Memon, said that Diaspora was the most precious asset of the nation. The remittances sent by overseas Pakistanis exceeds the total export proceeds and accounts for almost 8 per cent of GDP, he added.

Memon also said that this was a big achievement, adding that the big part of the increase in remittances could be attributed to the enhanced use of formal banking channels on the back of sustained efforts by the government, the central bank, and foreign missions.

SBP Deposit Protection Corporation Managing Director Syed Irfan Ali, informed the participants that it takes only 48 hours to open a Roshan Digital Account.

The overseas Pakistanis could now execute various banking operations through RDA, including paying utility bills, automated teller machines (ATM) transactions, and e-commerce.

The account enables them to invest in stocks, get car loans at markup rates as low as 7 per cent; invest in Naya Pakistan Certificates, purchase property and even give charity.

He clarified there would be no tax on depositing the amount in RDA, and the customers would not have to file returns; however, he said there would be 10 per cent withholding tax on profits only.

AKD Group Chairman Aqeel Karim Dhedhi said that although initially, the government had to take tough decisions; however, when the suitable time arrived, it took business-friendly decisions. The country has now come out of the crisis and the economy was in a much better position than it was in 2018.

The Roshan Digital Account provided a good opportunity to the overseas Pakistanis to invest in various fields of the economy, including Naya Pakistan Certificates, housing and equity market, he said.

The economic figures provided by the government were correct, he said, adding that the country had exceeded the growth projections of the International Monetary Fund, whereas exports, remittances, and large scale manufacturing have witnessed a considerable growth and the rupee was also stable.

The existing trend in the LSM indicates a revival of the economy, Dhedhi said, adding that the government has been focusing on promoting the industry and the agriculture sector.

The housing sector provides good investment opportunities and it was for the first time in history that the government announced a scheme to facilitate low-income people to build their houses, he said.

The AKD Group chairman said there would be a demand for around 200 million houses altogether in the next 25 years.
Bank Alfalah Limited Director and CEO Atif Bajwa said that the digital initiative would further expand, adding that RDA facilitates overseas Pakistanis to have emotional connection with their home country. The emotional connection has been converted into a strong financial connection, he added.

AKD Securities Limited Chief Executive Officer Farid Alam informed the participants about the opportunities available in investing in the equity market and the incentives provided by the Pakistan Stock Exchange, in this regard.

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