KARACHI:
The central bank is targeting to attract $1 billion from overseas Pakistanis through Roshan Digital Accounts (RDA) as the first milestone in a long journey. A majority of the inflows are coming from Saudi Arabia and the United Arab Emirates (UAE).
RDA has been a success story so far. Prime Minister Imran Khan welcomed the receipt of over $500 million through RDA last week.
“We are targeting around $1 billion pretty soon,” State Bank of Pakistan (SBP) Deposit Protection Corporation Managing Director Syed Irfan Ali said at the launch of RDA services by Dubai Islamic Bank (DIB) on Wednesday.
DIB is the 10th bank in Pakistan that has started facilitating overseas Pakistanis in investing in stocks, property, savings certificates and getting car loans and mortgage financing through the RDA since the start of services in September 2020.
“Since DIB has joined the (RDA) club, so hopefully $1 billion is achievable,” he remarked.
However, the banking sector regulator did not mention the timeline for achieving the $1 billion mark. Research houses have estimated that Pakistan will achieve the milestone by June 30, 2021 and the amount may reach $1.5-2 billion by December 2021.
Initially, the central bank invited investment in US dollar and the rupee through the RDA. Last week, it allowed non-resident Pakistanis to also invest in UK pound and euro in a range of assets through the RDA.
Overseas Pakistanis could now invest their savings in government bonds - the Naya Pakistan Certificates - “in euro and British pound in addition to the US dollar and Pakistani rupee, or the stock market or property,” said SBP Deputy Governor Murtaza Syed.
“The cost of transferring funds internationally to and from RDA accounts has been reduced considerably to between $5-9 for most transactions compared to $40-50 earlier,” SBP Governor Reza Baqir said in a video message.
Ali revealed that overseas Pakistanis had opened 92,500 accounts in around 10 banks in Pakistan in the first five months under the RDA initiative. They have remitted $554 million through RDA from 97 countries.
Giving the breakdown, he said, 35% of the total inflows came from the UAE, 22% from Saudi Arabia, 7% from the US, 5% from the UK and the remaining 31% from other countries.
Out of the total transfer, non-resident Pakistanis invested 35% (or $195 million) in the Naya Pakistan Certificates (NPCs), 29% (or $163 million) in Shariah-compliant NPCs and 1% (or $7 million) in the stock market and property, he said.
“We are off to a great start,” the deputy governor said, adding that it was just the tip of an iceberg considering that around nine million Pakistanis lived outside the country.
“We will be able to celebrate many more milestones in the coming months,” he said.
Every day, around $6-7 million is coming and around 500-600 accounts are being opened. “These funds are…helping Pakistan’s local economy and increasing our foreign reserves. RDA is, therefore, emerging as a real win-win situation for both overseas Pakistanis and their homeland,” Syed said.
RDA is a lifestyle product as it has something for everyone and can meet needs of all individuals.
Moreover, the tax regime for such investments has been made extremely simple and user-friendly, so that overseas Pakistanis do not have to worry about filing tax returns on the use of RDA.
An important additional feature of the RDA is that the investment can be fully repatriated. This means overseas Pakistanis can remit their funds back to where they live anytime in a completely seamless way, without the need to take permission of the State Bank.
“So they can have complete peace of mind that whenever they need their money back, it will be available to them,” he stated.
Published in The Express Tribune, February 25th, 2021.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ