Roshan Digital Account inflows reach $3.382 billion by January

KARACHI: Inflows through Roshan Digital Account (RDA) from overseas Pakistanis reached $3.382 billion by January 2022, in a period of 17 months, since its launch in September 2020, the State Bank of Pakistan (SBP) data showed on Saturday.

RDA is a joint effort by the SBP and commercial banks to integrate the overseas diaspora with the country’s banking system. Expatriates from 175 countries have opened 342,611 accounts.

Total investments made in Naya Pakistan Certificates (NPCs) came at $2.319 billion as of January 31, 2022, with $1.278 billion invested in the conventional NPCs while $1.041 billion in Islamic NPCs. The non-resident Pakistanis invested $34 million in the equity market.

These inflows contribute to the buildup of a country’s foreign currency reserves and stabilise the local currency. Pakistan posted a current account deficit of $9.1 billion in the six month of this fiscal year, versus the surplus of $1.2 billion in the same period of last year. The increase in the deficit is driven by a hefty trade gap amid higher imports.

Governor SBP Dr Reza Baqir at an event last month said RDA generated more than $3 billion inflows from expat Pakistanis in one and half year, which was higher when compared to the foreign direct investment of $2.6 billion in the same period.

“The RDA figure of $3 billion is higher than the International Monetary Fund (IMF) has given for us under this loan programme. We have to generate funds from our sources so we will not need to go to the international lenders to bailout our economy,” he said.

Increased profit rates being offered on NPCs raised the demand for these instruments from the Pakistani diaspora across various regions.

The investors get a profit rate of 5.5 percent on three-month, 6 percent on six-month, and 6.5 percent on 12-month dollar-denominated NPCs. For three- and five-year certificates, the return is 6.75 percent and 7 percent.

The profit rates being offered on the local currency denominated certificates are 9.5 percent to 11 percent on different tenors.

At the end of April 2021, the SBP allowed overseas Pakistanis to purchase cars via their RDAs, under the Roshan Apni Car scheme. Under this scheme, banks offer both lien- and non-lien-based loans to RDA-holders, and the car assemblers claim to deliver the cars on priority basis to RDA-holders. Under lien-based financing, the bank has a lien on the funds in the RDA or the depositor’s holdings of NPCs; as such, these loans are available at relatively lower rates.

Furthermore, both fixed- and variable-rate loans are offered to facilitate customers of varying risk appetites. Moreover, nonresidents can now apply for housing finance (under Roshan Apna Ghar), and deposit funds into the RDAs via money transfer operators such as Western Union and MoneyGram.