KARACHI: KARACHI: Foreign exchange inflows through the Roshan Digital Account (RDA) reached 2.92 billion by November 2021.

The expatriates opened 299,676 accounts from 175 countries. RDA inflows declined to $ 239 million in November from $ 266 million a month ago.

Since the State Bank of Pakistan (SBP) and commercial banks launched RDA in September last year, the volume of transactions and investments through the incentive-laden program has expanded. These inflows also helped build the country’s foreign exchange reserves at a time when the government is grappling with a large current account deficit with strong imports and falling rupees. The current account deficit widened from $ 1.13 billion in October to $ 1.66 billion in October. The local currency has lost 11 percent in value since July this year. The SBP’s data also showed that a significant portion of these funds were used to invest in Naya Pakistan Certificates (NPCs) and the capital market.

Total investments in NPCs as of November 30, 2021 were $ 2.0 billion, of which $ 1.1 billion was invested in the conventional NPCs and $ 868 million in Islamic certificates of this instrument. The Pakistani non-residents invested $ 29 million in the stock market. Analysts said the surge in NPCs and stock investments is being driven by higher returns.

A higher return from NPCs is the biggest attraction for foreign Pakistanis as interest rates in the United States and Europe are zero percent.

Investors get a win rate of 5.5 percent for three-month, 6 percent for six-month, and 6.5 percent for 12-month dollar-denominated NPCs. For three- and five-year certificates, the yield is 6.75 percent and 7 percent, respectively.

The certificates, denominated in the local currency, are offered with win rates of 9.5 to 11 percent with different terms.

Pakistan has one of the largest diasporas in the world with 6.3 million (UN, 2020) to 8.8 million (Pakistan’s government, 2018) Pakistani living abroad, the SBP said in its annual report on the state of the Pakistani economy for fiscal year Published last month in 2020/21. The foreign exchange these migrants send to support their families and for investment purposes has resulted in the country consistently ranking in the top 10 countries with the most remittance recipients.

More recently, the operational barriers to migrants investing in the stock market, mutual funds and real estate in Pakistan through direct banking channels have been recognized.

The existing bank accounts for foreigners, the Special Rupee Convertibility Accounts, were not ideally suited for individual emigrants and were aimed more at institutional investors and corporations.

“The political solution included a number of changes to foreign exchange regulations in FY2021 that would allow migrants (non-residents) and eligible residents to open bank accounts digitally in six currencies – US dollars, pounds sterling, euros, UAE dirhams, Saudi riyals and the PKR – with several commercial banks in Pakistan, ”says the SBP report.

In late April 2021, the SBP allowed foreign Pakistanis to purchase cars through their RDAs under the Roshan Apni Car program. As part of this program, banks are offering both lien and non-lien loans to RDA holders, and the auto mechanics claim to give the cars priority to RDA holders. In the case of lien financing, the bank has a lien on the funds of the RDA or on the depositor’s holdings in NPCs; Hence, these loans are available at relatively lower interest rates.

In addition, both fixed and variable rate loans are offered to support customers with different levels of risk tolerance. Additionally, non-residents can now apply for home finance (under Roshan Apna Ghar) and deposit funds into the RDAs through money transfer providers such as Western Union and MoneyGram.