Roshan Digital Account (RDA) has crossed $2 billion mark in eleven months. When the product was launched last September, SBP didn’t come up with any number, as the idea was to start tapping around nine million Pakistan diaspora in anticipation of it started paying divided. Out of the $2 billion, around $1.4 billion are in Naya Pakistan Certificate (NPC) from over 200,000 accounts.
At the launch SBP was modest to target 1 percent of diaspora at an average inflow $10,000 in the first phase without any timeline. The average ticker size is same for reaching $2 billion in less than a year. Like any new product, it took time to speed up. Diaspora needed to know about the product, and then there were questions about economic conditions and repatriation of the funds. Slowly and gradually the confidence is building, and the pace of flow is being accelerated. It took around eight months to get the first billion dollar, and the second billion came in less than four months.
The speed of inflows is growing every month. The accounts opened are still very low as compared to the vast diaspora. The SBP and Banks are doing marketing efforts to keep on attracting expats. At the start, eight banks signed off on RDA and today the number is twelve. A 13th bank (ABL) is in the pilot stage. The SBP is now pushing banks to do more innovative and aggressive marketing.
How to keep pace (or further increase) in the second year is the important question now. Around 70 percent is coming in NPC - around 40 percent of NPCs are Islamic certificates. The SBP a few months back launched a couple of products including Roshan Apni Car and Roshan Samajhi Khidmat. Now SBP is working on new products including one on housing and other on investment in equity market.
The idea of launching these products – especially loaning products is ensuring the future inflows and a continued relationship with the RDA holders. The repayment of these loans is to come from RDA and these will ensure steady flows. The other advantage for expats is that RDA connects the diaspora with domestic banking and this allows them to invest seamlessly and to have products (such as car and houses—this is based on credit worthiness) for loved ones while sitting outside.
To date, the major investment is in NPC. A small amount of $18 million has poured in equity. The process to invest in equity is not completely digitized and it requires to open brokerage account separately. The SBP is working on product to ensure complete digitization which will allow expats to invest in the equity market more conveniently.
The other objective of SBP should be to diversify the RDAs geographically by engaging more with diaspora across the board. Currently, over 50 percent of the flows are coming from GCC – mainly two countries – UAE and KSA. One reason is that higher number of diaspora is residing there. The other reason is that residents of these countries are not national there and they mostly invest in their home country which is Pakistan Plus, the investment options are thinning there.
The next step is to look at the West – especially North America. That is a big market with massive potential. With better economic conditions and two-billion-dollar inflows, it is about time for banks and SBP to go and get them on board at a bigger scale. The SBP should target to keep the pace of inflows of a billion dollar every 3-4 months.