RDA inflows exceed $3 billion in 16 months

KARACHI: Inflows through Roshan Digital Account (RDA) from overseas Pakistanis reached $3.16 billion in September 20-December 2021 period, the central bank said on Friday.

“Roshan Digital Account achieves 3 more milestones. Over 300,000 accounts opened, deposits cross $3 billion and investments in Naya Pakistan Certificates rise above $2 billion in just 16 months. Grateful to our overseas Pakistanis and banks for these remarkable results,” the State Bank of Pakistan said in its official Twitter handle. Monthly inflows in December clocked-in at $244 million, compared with average inflows of $266 million during the last six months. These inflows stood at $239 million in November 2021.

Total investments made in Naya Pakistan Certificates (NPCs) came at $2.2 billion as of December 31, 2021, with $1.192 billion invested in the conventional NPCs and $957 million in Islamic NPCs. The non-resident Pakistanis invested $32 million in the equity market.

These inflows help accumulate the country’s foreign currency reserves and stabilise the local currency. The country posted a current account deficit of $7.1 billion, or 5.3 percent of its gross domestic product in the five months of this fiscal year versus the surplus of $1.9 billion a year ago. The rise in the deficit was attributed to the higher imports amid increased domestic demand and the surge in global commodity prices.

Higher yields being offered on NPCs increased the demand for these instruments from the Pakistani diaspora across various regions. The investors get a profit rate of 5.5 percent on three-month, 6 percent on six-month and 6.5 percent on 12-month dollar-denominated NPCs. For three- and five-year certificates the return is 6.75 percent and 7 percent.

The profit rates being offered on the local currency denominated certificates are 9.5 percent to 11 percent on different tenors. Launched in September 2020, RDA is a joint effort by the SBP and commercial banks to integrate the vast overseas diaspora with the country’s banking system.

At the end of April 2021, the SBP allowed overseas Pakistanis to purchase cars via their RDAs, under the Roshan Apni Car scheme. Under this scheme, banks offer both lien- and non-lien-based loans to RDA-holders, and the car assemblers claim to deliver the cars on priority basis to RDA-holders. Under lien-based financing, the bank has a lien on the funds in the RDA or the depositor’s holdings of NPCs; as such, these loans are available at relatively lower rates. Furthermore, both fixed- and variable-rate loans are offered to facilitate customers of varying risk appetites. Moreover, nonresidents can now apply for housing finance (under Roshan Apna Ghar), and deposit funds into the RDAs via money transfer operators such as Western Union and MoneyGram.