The Roshan Digital Account (RDA) initiative, which provides overseas Pakistanis with investment opportunities in areas like saving certificates, stock market and property, is expected to attract $1-1.5 billion over the next six months and build the country’s foreign currency reserves.
The State Bank of Pakistan (SBP) reported that non-resident citizens deposited the largest amount of $7.7 million in a day on Wednesday in their RDA at banks operating in Pakistan. With this, their total deposits grew to $139.4 million in the past three months. Prime Minister Imran Khan had launched the initiative in September 2020. Over 50,000 overseas Pakistanis have so far opened the accounts in eight Shariah-compliant and conventional banks.
“Yesterday (Wednesday), inward remittances from overseas Pakistanis into #RoshanDigitalAccount rose to $7.7 million, their highest-ever daily amount. To date, total inward remittances into RDA have reached $139.4 million, with $81 million invested in Naya Pakistan (saving) Certificates,” the SBP announced on its official Twitter handle on Thursday.
“This is a very good start,” SBP Deputy Governor Murtaza Syed said while speaking at a TV show last week.
“We at the State Bank of Pakistan and the eight banks (offering RDA) are monitoring developments in RDA on a daily basis. We want to create the momentum,” he added.
“The initiative is expected to attract $1-1.5 billion from overseas Pakistanis over the next six months,” Pak-Kuwait Investment Company (PKIC) Head of Research Samiullah Tariq said while talking to The Express Tribune.
Tariq added that RDA was in its testing phase for non-residents these days. Banks were also improving their services through new experiences from cycles of investment and divestment in different assets in Pakistan. Successful financial transactions (inward and outward) would build overseas Pakistanis’ confidence in the initiative, he said.
“The initiative is expected to attract financially sound and established non-resident Pakistanis having built assets abroad. They will deposit and invest heavily once their trust is built in banking services and investment and divestment processes,” he said.
Many overseas Pakistanis fall within the low to middle-income groups, who usually send their entire savings to their family members and friends every month in the shape of workers’ remittances.
Inflows into RDA are also considered as remittances. They reflect in the country’s foreign exchange reserves that stood at $13.29 billion as of December 4, according to the latest update from the central bank.
The reserves are enough to provide import cover for over three months. A buildup in reserves will increase the country’s capacity for imports.
“Any slowdown in receipt of (monthly) workers’ remittances will be offset by RDA…RDA will take remittances to unforeseen high levels,” Tangent Capital Advisers CEO Muzammil Aslam said the other day.
RDA has helped increase the number of investors in different assets in Pakistan. “The number of investors at the Pakistan Stock Exchange (PSX) had remained stagnant at 200,000 for the past 12 years. RDA has, however, helped attract around 50,000 new overseas investors in a small period of just three months,” Tariq highlighted.
Syed said on an average 700 overseas Pakistanis had been opening bank accounts in Pakistan every day since the initiative was launched in mid-September. The number of new accounts usually increases to around 1,000 at weekends.
So far, over 50,000 overseas Pakistanis from 90 countries around the world have opened their accounts. Around 11 million Pakistanis are currently living abroad.
Published in The Express Tribune, December 11th, 2020.