KARACHI: The government has begun paying the salaries of its employees and vendors bills through the State Bank of Pakistan’s instant payment system, Raast, the central bank’s official said on Monday.
Speaking at the ‘Future Banking Summit 2024’ conference, Executive Director of the Digital Financial Services Group of the SBP Syed Sohail Javaad said the collection of revenue in taxes and other financial transactions in the government domain is increasingly made via digital means.
At present, the government is paying salaries to more than 90 per cent of its employees in the federal capital (Islamabad) via Raast. According to Javaad, the federal government salaries, which are processed via Karachi, were processed through Raast for the first time last month.
Next month, the salaries of the Auditor General of Pakistan (AGP) and government employees in Punjab and Khyber Pakhtunkhwa will also be made through Raast.“The government is keen on digitizing payments,” he said.
According to him, online financial transactions via Raast are growing at a fast pace, leading the country towards a digital economy.He said the number of financial transactions via Raast has spiked to 2.5-2.6 million a day these days from 1.8 million a day in June 2024.
The first Rs1 trillion worth of financial transactions on Raast were done in 336 days while the last Rs1 trillion worth of transactions were done recently in only 22 days. The trend is showing how fast the instant payment system Raast is growing, he added.
He revealed that payment transactions through mobile wallets, branchless banking, electronic money institutions, fintech and e-commerce have significantly jumped over the past five years.
The SBP has recently reviewed the digital payment infrastructure in place in the country and exhibited full confidence banks and vendors are well capable of taking the government pressure to rapidly migrate to digital payment system from cash-based transactions, he said.
“The government is all set to raise a huge demand for digitalization. We are sure we will efficiently manage it,” said Javaad.He claimed Pakistan’s digital banking infrastructure is as strongly capable of taking any high pressure as India, recalling the neighbouring country efficiently passed through the cash crunch crisis back in 2016 after its government demonetized almost 86 per cent of its banknotes including Rs500 and Rs1,000 to check corruption there.
“I am sure banks and vendors are all ready to pass through the digitalization pressure time, though some vendors may be in trouble.”Chief Digital Officer and Group Head of Bank Alfalah Yahya Khan said almost one-third portion of the cash at around Rs10 trillion remains in circulation, causing high inflation and fuelling the informal economy.Banks may deploy ATMs to collect cash from businesses that remain open after 5pm when banks shut down everyday operations.