State Bank’s latest initiative Roshan Digital Accounts (RDA’s), in collaboration with commercial banks operating in Pakistan, launched on September 10, 2020 has managed to captivate the attention of the overseas Pakistanis by offering much higher returns on deposits compared to the returns in developed economies.
The RDA’s were basically introduced to allow Non-Resident Pakistanis (NRPs) to partake in banking, payment and investment activities in Pakistan without being physically present in the country. In response to a query on Tuesday, SBP said that the total inflows in RDAs have reached $400 million.
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The SBP also declared that the total 80,000 RDAs have been opened so far, without divulging which country or region contributed most to the number. Banking experts and currency dealers, however, believe that majority of the accounts were opened by Pakistanis living in the Gulf which provides 65 per cent of the total remittances to the country.
A senior banker said that though the inflows were encouraging, they were still slow compared to what the government and the state bank had in mind. However, attracting $400m within four months could be a good substitute for hot money, he added. The inflow through RDAs could increase in the second half of the current fiscal FY21, if the current account remains surplus with an improved foreign exchange reserve, he added.
Through RDA’s, NRP’s can now have access to online banking, domestic funds transfer, payment of utility bills and tuition fees. Moreover, they can also invest in government bills, stock exchange, and real estate sector with the option of full repatriation. This new banking solution aims to encourage Pakistanis living abroad to invest in their own country and help elevate the nation’s economy.
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On the investments made through Roshan Digital Accounts, account holder won’t have to file any tax returns. A full and final rate of 10% withholding tax will be charged on profits, instead, saving the account holders from a lot of hassle.
SBP has also launched Naya Pakistan Savings Certificate with the aim of boosting the country’s economy by attracting foreign investments. They are high-interest yielding sovereign investment certificates issued by the State Bank of Pakistan (SBP) for Foreign Currency Value Account holders (FCVA) and Pakistani Rupee Value Account holders (NRVA). They offer lucrative risk-free returns for the investors over different maturities and are also presenting the NRP’s with an opportunity to play their part in the development of a progressive Pakistan. NPCs offer attractive risk-free returns over different maturities. The buyers can own the certificate in US dollar with the highest interest rate of 7pc and in Pak rupees with the highest rate of 11pc per annum provided the investment is made for 5 years. They are available in both conventional and Shariah compliant versions administered by the State Bank of Pakistan.
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Both RDA’s and Naya Pakistan Savings Certificates are a step in the right direction by the current government as they would help Pakistan in generating sufficient financial resources to spur economic development in the country and would ensure smooth access to the financial sector in Pakistan for the overseas Pakistanis.