In an amazing development for the economy and people of Pakistan, a new facility of services has been provided for overseas Pakistanis or Non-Resident Pakistanis (NRPs). This initiative of the State Bank of Pakistan allows millions of overseas Pakistanis to conduct banking transactions whether related to making payments or investing in Pakistan.
For the first time in the history of Pakistan, overseas Pakistanis are able to avail a facility which they have been seeking for a very long time. NRPs will be able to partake in the banking system of their homeland through an entirely digital and online platform. Previously, it was a complex and cumbersome process for overseas Pakistanis to open an account and transact therein. However, now, they will not be encumbered to visit any bank branches or consulates to open a bank account in Pakistan anymore.
This platform, the Roshan Digital Account (RDA), provides for overseas Pakistanis to open an account within 48 hours, subject to provision of soft copies of their documents and the necessary due diligence conducted by the banks/ relevant entities. Specifically, Roshan Digital Account will allow the Pakistanis residing abroad to integrate into the Pakistani banking and payment system.
The RDA is a huge improvement of services available to overseas Pakistanis who are a substantial source of remittances flowing into the country. In our culture, where family values rule supreme, the expatriates who go to foreign lands to settle or work there remit funds to their parents living in Pakistan. These funds can be used to pay utility bills, conduct e-commerce transactions, carry out transactions for investment in the capital market and undertake other useful transactions either directly through the account or by sending these funds to their family members in Pakistan. In other words, this platform provides for the crucial financial connectivity that the expatriates or overseas workers needed to have with their parents or other family members back home. As per our social norms and values, funds for philanthropic activities and Zakat remittances are also sent by overseas Pakistanis. The new digital platform is a safe and transparent conduit for sending funds for these purposes as well. It also provides a facility to parents of overseas Pakistanis who are residing with their children abroad, to access their bank accounts in Pakistan for their transferred monthly pension funds.
Through the RDA, overseas Pakistanis will also be able to invest in debt instruments issued by the Government of Pakistan such as Naya Pakistan Certificates (NPCs). The NPC is an annualised return debt instrument having different tenors and rate of returns. There is also the Shariah-compliant NPC available for those investors who want to invest according to Shariah rules and principles.
The RDA is an excellent platform through which overseas Pakistanis such as those settled in the Middle East, who may not have citizenship of their respective countries, can invest in Pakistan and make a solid foundation for themselves when they have to return to their homeland anytime in future. Similarly, for Pakistanis residing in other countries such as the UK and Canada, where they may well have permanent residency or citizenship thereof, the NRPs can invest in Pakistan, build homes for their parents or other family members residing in Pakistan, invest and build other assets in the country such as a stock portfolio and earn an additional source of income for themselves, taking advantage of the competitive returns offered by Pakistan’s capital market. Pakistan’s stock market has offered excellent returns of 15% (annual average returns) in the last 10 years.
The RDA has made it very convenient and transparent for overseas Pakistanis to transact in Pakistan or invest in Pakistan’s capital market. Previously, overseas Pakistanis had to send funds for investment or other purposes through their family members or agents which was not a very efficient or transparent way to do so. This also created an anomaly in terms of tracking and filing tax returns, etc. Now, through the RDA, the process of transferring funds has become much simpler and easier. Furthermore, it has become transparent and official with the result that all new investment from abroad is now channeled through RDAs keeping a record and trail of where the funds are coming from and where they are being directed, thereby pre-empting possibility of any hidden or illegal transactions.
Therefore, it is safe to say that Roshan Digital Account is not only a convenient, efficient and viable conduit to invest and transact in Pakistan and its capital market but is also a source of strengthening the economy of Pakistan. Overseas Pakistanis are highly encouraged to use this platform to make investment inroads in their native country and conduct transactions through the banking system of Pakistan via the RDA. As things stand today, more than 100,000 RDA accounts have been opened with more than 700 million USD (equivalent) amount remitted into Pakistan so far through RDAs. Of these, more than 3500 account holders have availed the option of investing in the stock market involving a total investment amount of USD 7.8 million USD (equivalent). This is a small proportion of the total amount remitted through RDA, but there is a huge potential for these numbers to grow and for more overseas Pakistanis to invest in Pakistan’s stock market through the RDA.
(The writer is Head of Marketing & Business Development, Pakistan Stock Exchange Limited).