Foreign exchange inflows from overseas Pakistanis through the expensive Roshan Digital Account (RDA) crossed the $2 billion mark in 11 months on Monday and can now require quite Rs13.1bn subsidy to take care of its growth.
“Roshan Digital Account deposits cross $2billion in only 11 months,” the depository financial institution of Pakistan (SBP) said during a tweet. “As Pakistanis everywhere the planet celebrated country’s Independence Day, #RoshanDigitalAccount crosses the historical milestone of $2bn in deposits,” it added.
The expensive RDA initiative features a brief history of 11 months.
The Economic Coordination Committee (ECC) of the cupboard had last week approved a budgeted subsidy of Rs13.103bn for the present financial year for a gift scheme to sustain foreign remittances eventually fiscal year’s record of $29.4bn and made RDAs a part of the subsidy scheme. The RDA transfers remain in bank accounts instead of being invested in government debt at up to seven per cent rate of interest and can entail reward subsidies.
ECC approved Rs13.1bn to sustain remittances growth and made RDA a part of subsidy scheme
SBP Governor Dr Reza Baqir had told journalists in Islamabad last week that $29.4bn remittances were an all-time high with a 25pc growth. He had confirmed that the financial institution was studying risks but such a growth wasn’t anticipated for the present financial year either. Given the expansion within the base, “we have taken a really conservative estimate for the present year” and growth could also be even less than 6pc.
As a part of the ECC discussions, minister of finance Shaukat Tarin, as head of the forum, had asked about the possible increase in remittances or RDAs through the reward-cum-subsidy scheme but got no clear answers, sources said.
Prime Minister Imran Khan had lauded overseas Pakistanis when the RDA inflows crossed $1bn on April 24 then again when these crossed $1.5bn on June 27.
Since its launch in September last year, the RDA inflows are increasing as more and more banks joined the scheme. the govt considers the RDA inflows as a symbol of overseas Pakistanis’ confidence within the economy, while critics are referring it to lucrative returns and travel bans.
The National Remittance Loyalty Programme (NRLP) approved by the ECC will offer incentives/rewards to overseas Pakistanis for sending remittances to Pakistan supported points accumulation structure. The scheme aims to incentivise remitters to transfer funds through formal channels, thus further strengthening the inflow of remittances.
The scheme being planned for formal launch with effect from Oct 1 envisages 1pc reward points on annual remittance of up to $10,000, 1.25pc on up to $30,000 and 1.5pc reward points on annual remittance of above $30,000.
For example, a remitter of $25,000 a year are going to be entitled to a gift of about Rs46,575 on the idea of points accumulation structure. this suggests the primary $10,000 remittance will get reward points at the speed of 1pc, followed by 1.25pc on subsequent remittance of $15,000.
An Android- and iOS-based mobile app (both in English and Urdu) has already been developed for the target by 1-Link whose development cost has been borne by the banks. The operating expense of this app shall even be haunted by financial institutions. The remitters are going to be awarded points against each remittance transaction in accordance with the NRLP criteria. The incentives shall be availed through redemption of points.
The NRLP will have three tiers — Green, Gold and Platinum — having added feature of “Virtual Loyalty Card” as a built-in feature. The remitters shall register as primary users and can be ready to add one supplementary user as a beneficiary. All home remittances through formal channels are eligible for the scheme, including funds received through RDAs and used and consumed in Pakistan.
Under the initiative, overseas Pakistanis shall be qualified to avail variety of services like the quantity of the awarded points under the NRLP against redemption of the accumulated points. for instance , the reward points are going to be available to be used against PIA tickers or payment for extra luggage on its international flights.
The Federal Board of Revenue also will entertain the accumulated reward points on duty payment of mobile phones under personal baggage, tax payment on purchase of locally manufactured vehicles or payment of duty on imported vehicles. Likewise, the purpose also will be redeemable against renewal of CNIC or NICOPs and passports, life assurance premium payment of State life assurance , OPF’s school fee payment and Utility Stores purchases, while separate counters would be found out at airports for priority clearance, placement of standees and banners for promotion, etc.
The estimated financial budget — supported the idea that remitters like 25pc of remittances as of FY2021 will register for the NRLP — is Rs13.107bn for FY2022. The budget disbursement mechanism shall be an equivalent as applicable under other incentive schemes for home remittances, whereby participating public sector entities (PPSEs) may submit their claims with the SBP through 1-Link after verification of claims. The SBP will directly disburse funds to the eligible PPSEs after receipt of funds from the finance ministry.
The prime minister had already approved the initiative on July 2 this year as a part of efforts for increasing the inflow of exchange into the country.
