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Thursday, May 25, 2023

Withdrawals from Roshan Digital Accounts: rumor turned into reality

Prior to the whole vote of no confidence episode, the SBP had been vigilant about the declining pace of accounts and inflows.

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As soon as Imran Khan lost vote of No Confidence and the coalition government took charge in April 2022, huge withdrawals from Roshan Digital Accounts (RDA) by overseas Pakistanis became the news of the town. The act reflected lack of trust in the new government by overseas Pakistanis.

As a response to the wide spreading news, the State Bank of Pakistan (SBP) came out and refuted news about large withdrawals from Roshan Digital Accounts (RDA) following Imran Khan being voted out of the National Assembly. “RDA inflows are growing, and total inflows have now surpassed the $4 billion mark in April,” SBP said.

Read more: Overseas Pakistanis sent $3.382 billion to Roshan Digital Account

However, there were plenty of posts on social media regarding withdrawal of funds from RDA or withholding remittances as a form of protest against the no confidence vote against Prime Minister Imran Khan.

On the other hand, prior to the whole vote of no confidence episode, the SBP had been vigilant about the declining pace of accounts and inflows.

RDA is a major initiative of State Bank, in collaboration with commercial banks operating in Pakistan to provide innovative banking solutions to the Non-Resident Pakistanis (NRPs), including Non-Resident Pakistan Origin Card (POC) holders, seeking to undertake banking, payment and investment activities in Pakistan. The initiative was launched in September 2020 and offered up to 7 percent profit on US dollar investment.

Coming towards the data released by the central bank regarding Pakistan’s external debt and liabilities, sharp decline in Naya Pakistan Certificates (NPC) is clearly seen in the last 3 months till June 2022. Overseas Pakistanis withdrew $472 million for three months period till June 22 as compared to the period ended at 31st March, 2022.

The decline has also been quoted by a PTI spokesperson Muzammil Aslam on his twitter account.

Moreover, deposits for Pakistan Banao Certificates (PBC) also declined by $13 million to $45 million in June 2022 from $58 million as on 31st March, 2022.

PBCs open avenues of investment for those retail level investors, overseas Pakistanis who are unable to take exposure in the sovereign bonds of the Government of Pakistan due to their higher level of minimum investment requirement.

The data released by the SBP clearly shows that the news about withdrawals from RDAs which arose immediately after No-confidence motion against Imran Khan was beyond just the rumor.