EDITORIAL: Roshan Digital Account (RDA) is fast becoming a success story. At the time of its launch, there were doubts about its prospects. Last week, the SBP tweeted that as many as 100,000 accounts have been opened from over 100 countries with a deposit of $671 million. Half the amount arrived in the last eight weeks. At this pace, the number may cross $1 billion mark in a matter of a few weeks. Some say that higher rate offered on the Naya Pakistan Certificate (NPC) is the prime reason for attracting funds to RDA. That is partially correct, but this is not the only reason for RDA’s success. In 2019, Pakistan Banao Certificate (PBC) was introduced where the returns on government bonds were in line with what NPC is now offering but it was a complete failure. At that time, the product was launched half-heartedly. No heed was paid to the operational glitches, nor was there any effort to market the product. In the case of RDA, the State Bank of Pakistan (SBP) took the product very seriously and relentlessly worked with the government, Pakistan diplomatic missions abroad, other expatriate forums and commercial banks to make this product work. At the start, eight domestic commercial banks (including their network of corresponding international banks) were selected for opening RDA accounts. Some of them were found lacking in zeal to push this product and the central bank received complaints to this effect that it took seriously and nudged the errant to deal promptly with operational hiccups.
Another obstacle was the expatriates’ concerns about taking money out. The 1998 debacle (freezing of foreign currency accounts) are still fresh in the peoples’ mind and they harbour fears about the strength of implicit sovereign cover. These concerns were taken seriously, as they should be and numerous webinars were conducted, where expatriates’ issues and fears were addressed by the central bank. When the money started coming in, banks began to fathom the potential of this new avenue of deposits and options for cross-selling. Many banks started marketing RDA in Pakistan and outside. A race between the banks started to capture RDA accounts. The number of participating banks has now increased to 10 and another bank is soon to be on board. Banks are now offering leveraging products on NPC and their own products to expatriates. However, there still exist some reservations amongst the expatriate as well as resident Pakistanis who can invest their declared assets outside Pakistan in the RDA. An educated guess is that about 10 percent of RDA at present is from resident Pakistanis; the potential for increased participation from them is even bigger.
Both resident and non-resident Pakistanis demand more transparency and granularity in data. The SBP should start making details public. This will help in assuaging the lingering fears that investors may still possibly have. The information available is patchy. There should be a separate update tag on the SBP website where regular updates on RDA should be available.
Furthermore, the data should be granular – such as details about the countries and amounts coming from there. It needs to be ascertained how much NPC is attracting and in what tenors. The SBP should also bifurcate the data based on non-resident and resident Pakistanis – how many accounts are opened by both and how much amount has come in them. However, secrecy about banks and individuals’ details should be strictly adhered to and maintained. Availability of frequent updates and data presentation in granular form will help investors make informed decisions and enable analysts to make projections or forecasts with more confidence. This will also help in rebutting the influence of sceptics that play on reservations of potential investors, be they residents or non-residents in different jurisdictions.
Copyright Business Recorder, 2021
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