EDITORIAL: Roshan Digital Account (RDA) is fast becoming a new avenue for generating much-needed foreign exchange in the country. The objective is to explore the savings of Pakistani diaspora and provide them with a lifestyle banking option which they can operate remotely. The programme seems to be well thought-out and is becoming a huge success.
Inflows in RDA have crossed the $1.5 billion mark in 10 months and are likely to reach $2 billion within a year of its launch if it keeps growing at the current pace. There are over 178,000 accounts that have been opened thus far from around 170 countries with the bigger chunk coming from the Middle East. The average amount per account is 8,500 dollars and there is geographical diversity mirroring the Pakistani diaspora.
Within RDA flows, a two-third of the amount — $1 billion — is invested in the Naya Pakistan Certificate (NPC) where the returns offered are 5.5 to 7 percent in foreign currency. There is a view in the local market that the returns offered in these accounts are higher and even resident Pakistanis can invest in them provided they have declared cash outside Pakistan.
The question is: how beneficial is RDA for the economy and what direction it should take to retail the interest of expats? RDA is another avenue to generate foreign exchange and in a country like Pakistan where growing imports are an imperative for economic growth, it is essential to diversify foreign sources of funding. Expats are largely tapped through the home remittances that they send to support their families. Expats also make investments in the country but mostly in the informal real estate particularly their experience in dealing with the local businesses has not been very fruitful.
The efforts, therefore, should be to deepen the financial relations of expats in Pakistan. RDA is one such step in that direction and the State Bank of Pakistan (SBP) and its governor, Dr Reza Baqir, must be complimented for introducing this scheme and making it a signal success. This scheme feeds into the expats’ desire to invest in safe avenues, whether products or schemes within Pakistan, in which they are able to invest and borrow themselves while living in their resident countries abroad. RDA meets all these criteria. It has so far offered two products – one is on car finance while other is for charity. There must be other avenues that need to be explored. One product SBP is working on is on home mortgage. Apart from that, there can be products for RDA investment in the stock market, mutual funds and (limited) real estate options. The next step should be the facilitation to businesses operated or started by expats in Pakistan or those expats who want to invest in them.
RDA holders are retail investors. They must have trust in the government and the SBP. The first step is to ensure the safety of their money. The second is the ease of repatriation. RDA does offer these. It will take time to build the trust. The SBP must continue the efforts to deepen the relationship in making RDA the winning choice for expats in financial communication and engagement
Copyright Business Recorder, 2021