A unique banking facility for foreign Pakistanis, Roshan Digital accounts (RDAs), collected a significant amount of $222 million in January 2022. The collection through RDAs is declined to nine percent from the previous month, Dec 2021. The PTI government initiated the project in Sep 2020. It was a milestone project by SBP and Central Depository Company (CDC).
Under RDAs, foreign Pakistanis can invest in Pakistan markets. Non-resident Pakistanis (NRP) were not willing to invest their money in any market of Pakistan. There are 8.5m Pakistani living outside the country earning their livelihoods. But very few NRPs intended to invest in their country’s markets. The introduction of RDAs with multiple investment options had opened the way of mutual benefit. According to the SBP data, RDA inflow hiked by 38 percent on a monthly basis.
“RDA flows continue at a decent pace, but a slowdown is evident,” said Fahad Rauf, head of research at Ismail Iqbal Securities. “The [pace of the] number of new accounts opened is also slowing down,” he added.
The opening of new accounts also increased by multiple folds. New accounts, 346,611, were opened in January with a 6.2 percent increase from last month. The State bank is also considering increasing profit rates on Naya Pakistan certificates (NPCs). These steps will further increase the RDA influx. NPCs are in the form of currency like euro, dollar and rupee. It is a fixed security offered by the central bank. It is present according to conventional banking and shariah laws. The profit rates on these certificates are better than other bonds. For example, the dollar-based return on the 12-month instrument is as high as 6.5pc.
From Sep 2020 to Jan 2022, the total amount received through Roshan Digital Accounts is estimated to be about $3.38 billion. Most NRPs invested their money in NPCs, about 69 percent of the total fund SBP received. So the calculated amount of $2.32 billion is capitalized in NPCs. Conventional bonds, Islamic instruments, and stocks attracted massive capital inflow under NPCs. According to central bank officials, this initiative proved an extraordinary step for foreign residents. Those Pakistanis living in Saudi Arabia benefitted the most from this scheme. Pakistani citizens in Saudi Arabia showed considerable interest in RDAs. The highest number of accounts registered by the Pakistanis living in Saudi Arabia. The whole process from opening to investment is digitally facilitated ease of banking for Pakistan’s foreign residents.
SBP Executive Director Arshad Mehmood Bhatti gave a detailed presentation on RDAs and their allied products, including NPCs, Roshan Apni Car, Roshan Samaaji Khidmat, and Roshan Apna Ghar, which offers overseas Pakistanis “a very convenient means” of buying property in Pakistan through bank financing or their funds.
Reforms in the banking sector ensuring investment safety margins will draw foreign investors’ significant attention. The facilitation in the finance management process boosts the country’s business environment. A better business environment and economic stability prove to be reasons for the influx of capital inside the country. The government and SBP should declare such schemes which engage all foreign investors to collaborate with the business sector. Schemes based on equities for foreigners will draw the foreign currency into the economy. Engagement of NRPs in the economy will increase the trust of overseas businessmen.
Source:
https://www.dawn.com/news/1673880/roshan-digital-account-inflows-jump-38pc-in-january
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