Under the State Bank of Pakistan’s initiative, resident investors can now virtually open up accounts in the stock market using only their banking applications or its portal. The announcement was made by the governor of the State Bank of Pakistan (SBP), Reza Baqir, on Tuesday where he said that the move was targeted at increasing and widening the outreach of the country’s capital market. This initiative comes as a part of the state banks’ new project, “Know Your Customers” (KYC).
The governor of the State Bank also lauded the Central Depository Company’s role in enabling the successful rollout of important projects such as the Roshan Equity Market and the Roshan Digital Account. He added that the initiatives have been rolled out and have seen great success. “This is only the beginning of what our vision is for the development of Pakistan’s Capital market,” said Dr Baqir.
Read More: State Bank of Pakistan debunks photos of new currency notes
Talking about CDC’s role in KCY project, the chief executive officer of the central depository company, Badiuddin Akber, said, “For the Shared KYC Project, CDC will again act as the information sharing bridge for the digital opening of capital market accounts through banking portals for local resident investors with the objective of removing duplication of information capture and KYC processes,” The initiative would help attract investors and increase the market penetration rate of investors.
Talking about the trend of investment in Pakistan, Samiullah Tariq, the head of research at the Pak-Kuwait Investment and Development Company, said that “the investment ratio is very low on per capita basis compared to regional countries,” and added that “I think this[KCY] is very helpful as account opening has been a major issue in the Pakistani market.”
Read More: State Bank of Pakistan imposes penalties worth Rs98m on 3 major banks
As a result of the change in the policies in the banking sector and the initiatives introduced by the state bank, Pakistan witnessed record growth in digital transactions in the FY 2020-21 and continues to show an upward trend in the FY 2021-22. According to the State Bank of Pakistan, digital transactions in Pakistan spiked 31.1 percent, amounting to Rs. 88 trillion or $500 billion, far exceeding the country’s GDP.
Under the state banks’ objective of financial inclusivity, several initiatives have been launched in the country, including Raast and the RDA. RAAST allows end-to-end digital payments among individuals, businesses, and government entities, and the RDA enables non-resident Pakistanis to open an account in Pakistan remotely. The account offers opportunities to the Pakistani diaspora to operate as they were operating from Pakistan, giving them digital access to all conventional account services, i.e. fee payment, fund transfers etc.
Since the introduction of the Roshan Digital Account, 350,000 overseas Pakistanis have opened accounts in it, and more than $3.5 billion have been sent into these accounts, far exceeding the total foreign direct investment in Pakistan over the same period.
Read More: State Bank considering launching digital currency in Pakistan