KARACHI: Overseas Pakistanis will now be able to operate digital accounts in their home country while sitting abroad, State Bank of Pakistan (SBP) dr. Reza Baqir announced in a move aimed at attracting investment from the diaspora to strengthen foreign exchange reserves.
In a speech to Bloomberg on Tuesday, Dr. Baqir that the new facility, called “Roshan Digital Accounts”, will be available to the nine million non-residents of Pakistan next week so they can invest money in local stock markets, buy government bonds and securities. and uses basic banking services.
The SBP chief added that currently at least eight Pakistani banks will facilitate Roshan Digital accounts and allow overseas Pakistanis to deposit funds in either US dollars or Pakistani rupees. In addition, the PTI-led government is also expected to launch debt securities with at least five different maturities and 5-7% and 9-11% returns on dollar- and rupee-denominated, respectively.
Note that Pakistan’s diaspora made up a large number of individuals, Dr. Baqir to the publication that most of them were “outside the financial system”.
“We are one of the few countries in the region that has delivered this digital boarding of the diaspora,” he said. “I want to emphasize on short tenor, because if someone wants to dip their toes, test the system and take money out.
“We want people to do it because it’s the only way you will be trusted” about the new system, he added. The new initiative is different – and practical – in the sense that a non-resident would have had to visit the consulate or embassy to open a bank account earlier. While this was possible, direct access to the Pakistan Stock Exchange was not allowed.
The foreign capital-hungry South Asian country is considering transfers from its diaspora key to its economy, given that revenue from its exports last year was only $ 2 billion for the $ 23 billion poured in the same period ending June.
Furthermore, the overseas Pakistanis posted a record high of $ 2.77 billion in July, indicating an improvement of $ 0.74 billion, or 36.5% compared to July last year, the SBP had announced last month, calling it “the highest ever”. registered worker transfers in a single month ”.
The central bank also stressed that transfers have risen 14.3% since the coronavirus outbreak in February, in contrast to the comparable period last year.
Interestingly, however, recent developments from Pakistan are not unique to India, which already introduced such an initiative – a reduced swap window – in 1998 and 2000 in an attempt to reduce the pressure on the rupee since the coronavirus pandemic hit Pakistan back in the end. of February, decision-makers have reduced interest rates by a total of 625 basis points in five moves to 7%. SBP has also expanded repayment facilities and announced soft loans to small businesses to curb unemployment.
“We are seeing a very noticeable improvement on the economic front, both domestically and in terms of exports,” Baqir told Bloomberg.
“We are quite optimistic that it will sustain, part of that is the stimulus we have provided,” he added.