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September 11, 2020

Banks place faith in NRPs for increase in remittances


September 11, 2020

KARACHI: Overseas Pakistanis have shown increasing interest in opening digital accounts, which in turn could encourage expatriates to send more money home through official channels, while also attracting investments in the stock market, real estate and government bonds, banks said.

The government launched a new facility named Roshan Digital Accounts (RDAs) for Pakistani diaspora on Thursday. These accounts provide innovative banking solutions for millions of Non Resident Pakistanis (NRPs) seeking to undertake banking, payment and investment activities in Pakistan.

Using their RDAs, NRPs can invest in government bills, stock market and real estate sector with the option of full repatriation. The soft launch of this initiative happened on August 4.

The eight banks participating in the scheme said the interest of overseas Pakistanis was encouraging even before the scheme had been formally introduced.

“Roshan Digital Account is an innovative product that will enable overseas Pakistanis to open a HBL (Habib Bank Limited) account from anywhere in the world, digitally, without visiting a branch,” HBL told The News in an email.

Through the opening of this digital account, overseas Pakistanis would be able to send remittances back home to their families in a hassle-free manner allowing them to conduct everyday banking transactions with ease from wherever they might be, HBL added.

Later, the launch of the Naya Pakistan Certificate could provide an avenue with lucrative investment returns. “Coupled with resident Pakistanis with declared assets abroad also being able to invest back in the country, it should result in meaningful volumes,” the bank noted.

HBL said it was playing a lead role in the launch of RDA. This was on account of the bank's strong digital banking prowess backed by the largest distribution network in Pakistan, historical presence in countries with a concentration of Pakistani diaspora and extensive product suite.

“We are confident that this will encourage our customers who are focused on investing in Pakistan or those resident Pakistanis with declared assets abroad looking for lucrative investment opportunities in-country. HBL is fast digitalizing its products and processes to help its customers lead hassle-free lives. Incoming remittances are a key component of Pakistan’s economy and eBanc Roshan Digital Account will play its part in the growth and adoption of these digital financial solutions to support remittances.”

To a query about the challenges and opportunities associated with this scheme, HBL said that the challenge and opportunity in this case were mirror images of the same issue; how

to appeal to a broad range of the diaspora, settled in different remittance corridors of the world.

That will require the right form of engagement and the right kind of incentive in the shape of foreign currency deposits, investment options, real estate investment etc, it said.

Islamic banks have also received a phenomenal response from NRPs to this initiative.

“We are seeing an increasing number of customers visit our official website for seeking information on this product and for applying online to open their account from different regions of the world,” Meezan Bank, a top Islamic Bank in the country, said in an emailed response.

Meezan RDA is a remarkable initiative that was designed to meet the banking needs of NRPs. We feel this was also an excellent opportunity to increase the reach of Islamic banking among NRPs, it said.

Until now, Meezan Bank was only serving domestic customers with a full range of Shariah-compliant products and services.

“With the launch of RDA, the outreach of Islamic banking products will spread throughout the world,” the bank said, and added that as the country’s only full-fledged Islamic bank offering RDA, Meezan Bank was pleased to offer the same in rupee, USD, GBP and Euro under the Islamic concept of Qard and Mudarabah.

In future, NRPs looking to invest in Pakistan would be able to use RDA for various avenues including Shariah-compliant shares listed in Pakistan Stock Exchange, real and commercial estate, Shariah-compliant government securities, and Meezan Bank's deposit products.

As of date Meezan Bank has received around 1,700 account opening requests. “Our account opening teams are working extended hours to liaise with customers and remove discrepancies if any,” it said.

The Islamic lender expects with the enhanced convenience, remittance volumes would increase and ultimately bolster foreign exchange reserves of the country.

Remittances to Pakistan rose 6.4 percent to a record $23.120 billion in the last fiscal year ended June 30. Fitch Ratings, however, sees a hit in credit ratings of five South Asian countries including Pakistan due to a possible decline in foreign currency inflows mainly in remittances and increasing need for financing in this fiscal year.