SBP, Arab Monetary Fund sign MoU to facilitate cross-border remittances

The State Bank of Pakistan (SBP) has signed a memorandum of understanding (MoU) with the Arab Monetary Fund (AMF), a working sub-organisation of the Arab League, to facilitate cross-border remittances between the Arab region and Pakistan.

A joint press release from the SBP and AMF said a ceremony was hosted in Abu Dhabi to sign the MoU to establish a framework of cooperation between Buna, the cross-border payment system operated by Arab Regional Payments Clearing and Settlement Organisation “ARPCSO”, owned by AMF, and Raast, Pakistan’s Instant Payment System.

The ceremony was attended by H.E Dr. Abdulrahman Bin Abdullah Al Hamidy, Director General Chairman of the Board of the Arab Monetary Fund (AMF), and H.E Jameel Ahmad, Governor of the State Bank of Pakistan, stated the press release.

According to details, integration of Raast with Buna aims to facilitate cross-border remittances between the Arab region and Pakistan through formal channels.

“This initiative will benefit individuals as well as businesses not only through instant, safe and cost-effective cross border payments, but also by strengthening economic, financial, and investment ties between the Arab countries and Pakistan,” the join-statement said.

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Commenting on the MoU, H.E Dr. Abdulrahman Bin Abdullah Al Hamidy said the collaboration with Raast underscored Buna’s commitment to continue connecting different regions together and reinforcing economic, financial, and investment ties between the Arab region and its main global partners.

“This resonates with the shared vision of innovating cross-border payment solutions to offer safe and efficient cross-border instant payments access for individuals and corporates,” he said. “We also aim to increase cross-border remittances by reducing costs and processing times.

He was of the view that the initiative confirmed the global character of Buna, which “adheres to the highest compliance standards to connect the Arab region with its main global partners in line with the vision of its founders, their excellencies in the Council of Central Bank Governors”.

Governor SBP Jameel Ahmad said the MoU was a significant strategic achievement that opened the door to closer connection between Pakistan and the Arab region.

“This collaboration between SBP and AMF is in line with our vision to leverage cross border integrations to complement the objective of building an innovative Digital Financial Services ecosystem.

“The integration of the two payment systems will increase remittances to Pakistan through formal channels, with enhanced speed, safety, and savings in these cross-border transactions,” he said.

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Ahmad shared that more than 5 million Pakistanis reside in the Arab region and around 55 percent of Pakistan’s total remittances come from Arab countries.

“SBP is committed to complete the necessary work and operationalise the connectivity between Raast and Buna in the shortest possible time,” he said.

What is Buna?

Buna is the cross-border payment system operated by the Arab Regional Payments Clearing and Settlement Organisation “ARPCSO,” which is owned by The Arab Monetary Fund “AMF.”

It aim to enable financial institutions and central banks in the Arab region and beyond to send and receive payments in local currencies as well as key international currencies.

What is Raast?

SBP ‘Raast’ Instant Payment System is an initiative built on international standard ISO 20022 and promises to be a fast and secure payment option for customers.

The first use case of Raast ‘bulk payments’ went live in 2021, which has been enabling the processing of bulk payments such as dividend disbursements, government-to-person (G2P) payments, mutual funds payments, or private entities’ pay-roll payments by corporates.

SBP launched the second use case of Raast i.e. person-to-person (P2P) payments in February 2022. Till date, as per to SBP, around 34 million RAAST IDs have been created by customers having performed more than 270 million transactions amounting to around Rs5.5 trillion (around $19 billion).

The 3rd use-case of Raast, which is person-to-merchant (P2M) payments has been recently deployed.