Roshan Digital Accounts cross $1b milestone

Overseas Pakistanis’ confidence in the domestic economy is on the rise, as the volume of their foreign currency deposits with local banks and their investments in a number of schemes through the Roshan Digital Accounts (RDA) surpassed a major milestone of $1 billion.

These inflows have played a significant role in strengthening Pakistan’s foreign currency reserves to around four-year high of over $16 billion, improving the country’s capacity to make international payments, including the import bill as well as foreign debt repayments, and stabilised the rupee-dollar parity at around Rs153. “Alhamdulillah, funds received through Roshan Digital Account have crossed $1 billion,” Prime Minister Imran Khan said on his official Twitter handle on Saturday.

“I would like to thank our overseas Pakistanis for their overwhelming response; also appreciate the efforts of SBP [State Bank of Pakistan] & banks for achieving this significant milestone in such a short period (seven-month).” Acknowledging the receipt of over $1 billion through the RDA, the SBP wrote on the microblogging website that it would soon introduce more exciting new products for the overseas Pakistanis through the RDA. It also announced that “an event to thank our overseas Pakistanis for their extraordinary response is being planned” soon.

“The inflows through RDA are estimated to reach $1.5 billion by June… and $2 billion by December 2021,” Samiullah Tariq, the head of research at the Pak-Kuwait Investment Company (PKIC) told The Express Tribune. Secondly, the inflows have emerged as an alternate source of foreign borrowing by Pakistan like it recently raised $2.5 billion through the sale of Eurobond at the world markets, he added. An additional benefit of the RDA is that the government would not have to repay the entire amount back to the investors in one instalment, which it has to do on the maturity of international bonds like Eurobond and Sukuk.

Also read PM Imran thanks Pakistani diaspora as RDA funds cross $1b

Consequently, the outflow from the RDA may not be huge at any point in time since the number of investors in the RDA is higher compared to the ones who purchase international bonds, according to Samiullah Tariq. “The RDA would continue to attract foreign currency deposits and investments into Pakistan. There is a need to continue offer them lucrative investment schemes and offer them local financial solutions through adopting global approach,” he said. The inflows would help stabilise the rupee-dollar exchange rate and making foreign debt repayments easy, he added.

“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 the other day. It remained unknown as how many new bank accounts were opened by the overseas Pakistanis under the RDA in recent months. The February updates suggested they had opened 92,500 accounts in around 10 banks in Pakistan and remitted $554 million from 97 countries in the first five months.

“We are off to a great start,” SBP Deputy Governor Murtaza Syed had said in February, adding that it was just the tip of the iceberg considering that around 9 million Pakistanis living outside the country. Every day, around $6-7 million is coming and around 500-600 accounts are 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 the overseas Pakistanis and their homeland,” he said.

RDA is a lifestyle product as it has something for everyone and can meet the needs of all individuals. Moreover, the tax regime for such investments has been made extremely simple and user-friendly, so that the 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 that the overseas Pakistanis can remit their funds back to where they live anytime in a completely seamless way, without the need for taking permission of the SBP.

“So they can have complete peace of mind that whenever they need their money back, it will be available to them,” Murtaza Syed had stated. Prime Minister Imran had launched the RDA initiative in collaboration with the SBP in September 2020. Majority of the inflows came from Saudi Arabia and the United Arab Emirates (UAE) and were mostly invested in conventional and Shariahcompliant Naya Pakistan Saving Certificates. Besides, they have invested in the listed companies on the Pakistan Stock Exchange (PSX) and properties. The overseas Pakistanis can get car loans and mortgage financing through the RDA and can pay their families local utility bills and schools fees.