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SBP says Raast, Buna link for Gulf remittances within 8 months

By News Desk
November 26, 2023

KARACHI: Raast, an instant payment system of Pakistan, will be integrated within next 8 months with Buna, a cross-border payment system of the Arab Monetary Fund (AMF), to facilitate remittances in real-time between Pakistan and the Gulf region, Pakistani central bank chief told Arab News.

Earlier this month, the AMF and the State Bank of Pakistan (SBP) had signed a memorandum of understanding (MoU) in Abu Dhabi to establish a framework of cooperation between Buna, which is operated by Arab Regional Payments Clearing and Settlement Organization (ARPCSO) and supported by all central banks in the region, and Pakistan’s Raast.

The photo released on Nov 3, 2023, shows the representatives of the SBP and the Arab Monetary Fund (AMF) inking a deal to ease cross-border remittances. —Facebook/rjenterprise01
The photo released on Nov 3, 2023, shows the representatives of the SBP and the Arab Monetary Fund (AMF) inking a deal to ease cross-border remittances. —Facebook/rjenterprise01

“We have targeted to complete the integration (of Raast and Buna) in six to eight months,” Jameel Ahmad, the SBP governor, told Arab News on the sidelines of the 8th Pakistan Banking Awards in Karachi.

The integration of Raast with Buna is aimed at facilitating cross-border remittances between the Gulf region and Pakistan through formal channels. This initiative will benefit individuals as well as businesses not only through instant, safe and cost-effective cross border payments, but also by strengthening economic, financial, and investment ties between the Arab countries and Pakistan.

“The biggest benefit of this integration will be instant transfer of funds from any member country of the Arab Monetary Fund, and secondly at a low cost,” Ahmad said. “These are the two key benefits but there are also other benefits, including security of the funds.”

The integration of payment systems will facilitate Pakistani workers living in the Gulf region, including Saudi Arabia and the United Arab Emirates (UAE) that are one of the major contributors to the remittance inflows to Pakistan. Saudi Arabia and the UAE provided employment to 77 percent of the Pakistani expatriate workers in 2022.

Speaking at the event earlier, the central bank governor said that expanding access to financial services for the underserved segments of the society, especially women, would be a top strategic priority for the next five years.

Ahmad said that a lack of access to financial services had negative effects on a significant portion of the population. He said that a lack of financial inclusion had negative effects on a significant portion of the population, such as high cash usage and reliance on informal savings and borrowing networks.

Ahmad cited the high cash usage rate and the reliance on informal savings and borrowing networks as some of the challenges faced by the financially excluded segments of the society. He also highlighted the wide gender disparity in financial access, with only one female account holder in the country for every three male account holders.

To address this challenge, the State Bank of Pakistan (SBP) Vision 2028 envisages enhancing the bank accounts coverage to 75 percent of the adult population, and increasing the depth, breadth, and quality of financial services, particularly for the low-income clientele, small and medium enterprises, and farmers, Ahmad said.

"The SBP has achieved significant progress on the financial inclusion goal during the last 10 years, with bank accounts coverage reaching to over 50 percent of the adult population, according to the SBP Vision 2028 document."

Ahmad also emphasised the themes of financial stability and technology, which he said were of paramount importance for the SBP as well as the industry executives attending the awards ceremony.

“A strong and resilient financial system is pivotal for macroeconomic stability and sustainable economic growth, and therefore ensuring the financial system stability remains a key priority area of the SBP Vision 2028.”

He added that the regulator and the industry needed to adapt their operations and business processes to the emerging risks from climate change and cyber-security, and that the SBP Vision 2028 envisaged enhancing the capacity of banks to better manage such shocks.

Ahamd also stressed the importance of harnessing technology to achieve the objective of financial inclusion, and highlighted the SBP initiatives to build a robust payment system, facilitate the entry of new players, establish trust by adopting international standards, and encourage and facilitate the adoption of new technologies.

He mentioned the landmark introduction of the instant payments system Raast, the regulatory framework for digital banks, and the digital onboarding framework in coordination with the National Database and Registration Authority (NADRA) as some of the examples of the SBP’s efforts to promote digitalisation of financial services and payment systems.