E-banking transactions exceed GDP

Amount to $500b in FY21, indicating rapid growth of digitisation in country

KARACHI:

Owing to the revolutionary initiatives introduced by the central bank, the e-banking transactions in Pakistan were recorded at around $500 billion in the previous fiscal year (2020-21), revealed State Bank of Pakistan (SBP) Governor Reza Baqir.

Speaking at the launch of Raast Person-to-Person (P2P) Instant Payments System on Tuesday, the central bank governor said that e-banking transactions were considerably more than the country’s total gross domestic product (GDP), which currently stood at $370 billion.

“If the figure is $500 billion now, you can imagine the pace at which we are digitising,” he remarked, adding that those transactions showed a year-on-year growth of 30.6% in volume and 31.1% in value.

Baqir said that there were around 190 million mobile phone subscribers in the country whereas only 80 million people had bank accounts, meaning that there were over 100 million people who had mobile phones but they did not own a bank account.

“Therefore, there is a huge potential for enhancing financial inclusion,” he said and expressed hope that the Raast initiative would help bridge the gap.

The SBP governor pointed out that Raast was different from other programmes as it facilitated free-of-charge transactions within seconds. He was hopeful that people would take benefit of the revolutionary system.

The State Bank has taken many initiatives for ramping up the pace of digitisation. In this regard, the installation of Point of Sales (POS) machines has shown a growth of 50% and it is expected to rise further at a rapid pace.

In collaboration with the National Database and Registration Authority (NADRA), the SBP will also facilitate people in undergoing biometric verification remotely for opening bank accounts.

The new banking system will be established in line with the Roshan Digital Account that has been introduced for overseas Pakistanis.

“Individuals can use Raast platform in their daily transactions similar to cash and they will not have to pay any fees or charges for using this payment system,” Baqir said. “It is secure, convenient and free of risks compared to cash.”

Raast “is easy and simple to use as it allows the linking of a bank account to the user’s mobile number, which is called Raast ID,” he said, adding that the facility could be used on mobile applications and internet banking portals of banks.

Raast P2P service is also available in bank branches for the facilitation of those people who do not own a mobile phone or have the facility of internet banking, said a statement issued by the central bank.

Currently, more than 18 banks, processing a majority of retail payment transactions, are offering Raast services. Customers are required to register for Raast in their bank’s mobile app, through internet banking or by visiting a bank branch.

“The remaining banks are expected to be onboarded with Raast in the coming weeks,” it said.

Baqir explained that Raast was Pakistan’s first instant payment system and it was established in accordance with the National Payment Systems Strategy, which was prepared by the State Bank.

The system was launched by the president of World Bank in 2019 during his visit to Pakistan.

“This project is a major initiative of the State Bank of Pakistan, and with its launch, Pakistan is now on the list of countries that have state-of-the-art instant payment systems,” he said.

He reassured the event participants that the SBP was committed to launching additional innovative features in Raast to further promote digitisation and financial inclusion.

Speaking about the SBP’s efforts to promote ease of payments, the central bank governor highlighted that in January it issued a digital bank licensing framework that provided flexible requirements for setting up digital banks in Pakistan.

For now, only five licences for digital banks will be issued and interested parties can apply for a licence until March 31, 2022, he announced.

Published in The Express Tribune, February 16^th, 2022.

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