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Roshan Digital Accounts receive $1bln in seven months

KARACHI: Foreign fund inflows through Roshan digital accounts (RDAs) have crossed $1 billion mark in more than seven months, with the highest amount of $806 million received in March, the central bank said on Saturday.

The State Bank of Pakistan (SBP) said the cumulative inflow of RDA deposits rose from $9 million in September to $806 million in March. The SBP attracted $594 million such inflows in February, according to the SBP.

“Funds received through Roshan Digital Account have crossed $1bn. I would like to thank our overseas Pakistanis for their overwhelming response, also appreciate the efforts of SBP and banks for achieving this significant milestone in such a short period,” Prime Minister Imran Khan wrote on Twitter. Analysts expect the RDA may reach $1.5 billion by the end of June.

RDA, launched in September last year, provides innovative banking solutions to millions of non-resident Pakistanis and resident Pakistanis with declared offshore assets, who need a secure and convenient facility, to undertake banking-payments, fund-transfers and investment activities in Pakistan, remotely, from abroad.

The SBP launched Naya Pakistan certificates (NPCs) in October aimed to offer attractive investment opportunities to overseas Pakistanis and resident Pakistanis with assets held abroad. These certificates are available in conventional and Shariah compliant versions.

Most of the investment is coming into the NPCs due to highly lucrative interest rates being offered on these investments.

The government has allowed the tax paid at source on profits on investments in NPCs, shares, mutual funds, and property to be full and final and reducing the cost of transferring funds internationally to and from RDA accounts.

NPCs are offering higher interest rates than those of developed and developing economies. These certificates offer annualised 7 percent rate of returns in US dollars and 11 percent in local currency on investment made for five years. “It’s [RDA] a nice development. Pakistan has an alternate source of borrowing. And a major benefit is that it has a diversified source/repayment and maturity has a benefit,” said Samiullah Tariq, head of research at Pak-Kuwait Investment Company. “Separate maturities and repayments, compared to bullet payment for Eurobond.”

The SBP also introduced conventional and shariah-compliant NPCs denominated in Euro and British Pound in order to raise funds from expats residing in the UK and Europe.

RDA is playing an important role to help stabalise the rupee, with lending support to the foreign exchange reserves. The RDA inflows are providing overseas Pakistanis the opportunity to make profitable investments, while also helping Pakistan’s local economy and increasing the foreign exchange reserves.