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Are Roshan Digital Accounts a lucrative investment opportunity for overseas Pakistanis?

Are Roshan Digital Accounts a lucrative investment opportunity for overseas Pakistanis?

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Roshan Digital Accounts (RDA) are a way for overseas Pakistanis to open and use digital bank accounts in Pakistan, all whilst being abroad. These accounts are part of a strategy to attract more foreign exchange into the country in order to bolster the foreign exchange reserves. So far this opportunity is proving to be popular with the Pakistani diaspora, as the chairman of the Pakistan Stock Exchange (PSX), Suleiman S Mehdi, stated that to date 25,000 RDAs have been opened, 382 of which are for capital market investments.

The reason behind the popularity of RDAs is that not only do they provide a quick and easy way to send money back to Pakistan, but they also allow non-resident Pakistanis to directly invest the Pakistani stock market and the Naya Pakistan Certificates (NPC), as well as offering a very high interest rate. The U.S dollar denominated interest rate of the NPC, over a five year tenure, is 7.0% which is higher than that of previous U.S dollar denominated bonds offered by the government of Pakistan, like the Pakistan Banao Certificates. According to the Governor of the State Bank of Pakistan, Reza Baqir, through these accounts the Pakistani diaspora will be totally free to remit any amount at any time. 

For those interested, the main features of the RDAs are:

  • RDA can be opened in two days.
  • Accounts of two types can be opened, Foreign Currency Value Account (FCVA) and Non-Resident Pakistani Rupee Value Account (NRC).
  • One or both types of accounts can be opened depending on customer preference.
  • FCVA can be opened in all major foreign currencies.
  • Funds from a RDA can also be withdrawn without any approval from any bank or the SBP.
  • RDA allows for direct investment in PSX and NPCs.
  • Only 10% withholding tax, as full and final tax, on profit from NPCs.
  • RDA cannot be fed (foreign currency) from the local market.

The process of opening a RDA, was purposefully kept simple to attract more overseas Pakistanis. Registration can be done in two working days and the account made fully operational thereafter. For most people the process seems to have been streamlined and easy. However, there are a small number of people who have voiced their complaints, on different social media platforms, about banks taking up to ten days to open a RDA instead of the two days mandated by the SBP. Despite small hiccups the process of opening a RDA is fairly simple. First select one of eight local banks operating this scheme, register to open an account and then pick an account type. After which, upload the pertinent documents including CNIC/NICOP/POC, passport, proof of non-resident status and proof of possession and source of income. And, lastly upload a photo and then just wait for account confirmation in the next 48 hours. The account will then be operational. 

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