KARACHI: Inflows through Roshan Digital Account (RDA) reached $2.7 billion in October since its launch in September 2020 reflecting the growing confidence of overseas Pakistanis despite Covid-19 related slowdown across the globe.

Of the total over 68 per cent or $1.834bn was invested in high-return Naya Pakistan Certificates (NPCs) during this period.

In dollar terms, the three-, six- and 12-month NPCs offer a profit rate of 5.5pc, 6pc and 6.5pc respectively. For three- and five-year certificate the return is 6.75pc and 7pc respectively.

The return rates in rupee terms are much higher ranging from 9.5pc to 11pc on different tenors.

The SBP data showed that the total investments since September 2020 rose to $2.677bn, registering an average inflow of $191 million per month.

Overseas Pakistanis invest larger chunk in high-return NPCs

The central bank and the government find the inflow satisfactory, but the bankers said the response is not up to the expectations.

Under the RDA, the investment for equity market was just $27m or 1pc of the total indicating the trust in equity market is very low.

Since the inception of the RDA, the government took a number of decisions to make the scheme attractive besides making amendments to reduce the tax compliance cost for overseas Pakistanis. The government has made the taxation regime simple, convenient and hassle-free for Non-Resident Pakistanis (NRPs) to open and operate these accounts.

The amendments have extended the coverage of full and final taxation regime to dividends and capital gains on shares and mutual funds investments and capital gains on real estate investments made through RDAs.

As a result, NRPs will not need to file tax returns against their income derived from investment made through RDAs and will not be subject to tax on cash withdrawals and bank transfers.

The RDA is a flagship initiative of State Bank aimed at connecting overseas Pakis­tanis with Pakistan’s banking and payment system.

In February this year Prime Minister Imran Khan suggested housing loans for overseas Pakistanis and asked the participating banks for providing more products to meet the demands of the Pakistani diaspora, such as automobile and housing loans.

Bankers say so far there is no report about the housing loans from overseas Pakistanis under RDA scheme.

Both the government and State Bank believes that inflows of RDA helped to generate economic activity and improve the country’s balance of payments by raising foreign exchange reserves, making the product a win-win for both the diaspora and the country.

In response to demand from overseas Pakistanis in Europe and the UK, the government has introduced NPCs in euro and pound in addition to the existing US dollar and rupee-denominated certificates.

Published in Dawn, November 7th, 2021