Inside Financial Markets
Roshan Digital Account, a real threat to Currency Exchange Business? - Sanie Khan

Roshan Digital Account, a real threat to Currency Exchange Business? – Sanie Khan

The launch of Roshan Digital Account on September 15, 2020, and Notification of October 8, 2020, is a clear message that Professionals at the helm in the Financial Institution are excited to limit the currency exchange business to the extent of the banking sector only.

As the major chunk of foreign remittances land into Pakistan through non-banking channel, and a lot dollars land into Pakistan via ‘direct-carrying’ from Dubai, the Roshan Digital Account has emerged as a ray of hope to implement this long standing desire to shun the currency-trading on non-banking-sector mom and pop shops.

 In the early hours of Oct 10, a statutory notification issued by the Ministry of Finance, titled Foreign Currency Account Rules 2020, started circulating on WhatsApp groups.

Clause 4 of the Rules stipulated that “any foreign currency account shall not be credited with any foreign exchange purchased from an authorized dealer, exchange company, or money changer, except allowed by the State Bank through general or special permission under any law”.

Roshan Digital Account has enabled overseas Pakistanis to open bank account digitally from anywhere outside Pakistan without visiting a branch and facilitates account holders to remit funds from abroad into this account and remit back with principle + profit basis without any regulatory approvals or hassles.

Roshan Digital Account was launched on September 15, 2020, but real transactions started taking place in the first month of October 2020. An approx. fifteen days nearly 21000 accounts were opened and for about 24 million dollars credited into this account.

According to Malik Bostan, the President of Currency Dealer Association, the dollar could break psychological barrier of 155/- and might get stable at around 150/-

The dollar has come down the level of 162.30/- from the level of 168/- which has reduced Pakistan’s debt servicing amount by Rs. 57o/- billions, as our 60% of wheat the pulses are imported, an ordinary man on the street has every right to expect that such a move shall reduce the prices of daily consumables.

Roshan Digital Accounts can be opened within 48 hours by non-resident Pakistanis after presenting valid CNIC/NICP/SNIC/POC, valid passport, proof of NRP status (POS/Visa/exit stamps) proof of profession and source of funds.

A non-resident Pakistani can open Current or Saving Account which is denominated in Pak Rupees, GBP, USD, JPY, CNY or Euro. This account can be funded through foreign remittances only, and as such one cannot deposit funds into these accounts from and within Pakistan.

Once, this account is operational and has funds, the holder of this account is issued with a check-book and ATM card. The disbursements from this account under the head of expenditures cannot be repatriated back, however, the wealth-management related disbursement can be repatriated on principle + profit basis.

In the first phase, the Government has allowed the investments into following instruments:

  • Dollar-denominated NAYA Pakistan Certificates which offer lucrative returns of 6-7%
  • Stocks, Term Deposit Receipts, Treasury Bills and Bonds,
  • Takaful Products  

It has been learnt that the work on allowing purchase of property in DHA and Baharia is in advanced stages and it is expected that the Government would add these two asset classes into the eligible portfolio of Roshan Digital Account by the end of December 2020.

Funds can be credited into this account by a third-party against sale of any declared moveable or immovable asset, however, it is mandatory that such funds must be disbursed through banking channel only. The ceiling limits of any disbursements into this account is theoretically the wealth-declarations which is in the concerned tax authorities of Pakistan or in respective countries.

The NAYA-Pakistan certificates or any other paper, stock or bond which is in the Roshan Digital Account is a standard document which could be placed against margin or can serve as collateral against any transaction. Normal tax slabs are applied over the profits that are credited into this account.

Our economy is a classified case of failed dollarized economic model. Despite our trade is largely priced in US dollars, yet a hefty decline of Rs. 5/- in the value of dollar could make our exports more competitive. Rising PKR would help offset the funding pressure, but such an ease is not enough to contain the firepower which is created by holding import and stifling growth.

Malik Bostan, the President of Currency Dealer Association has subscribed the view that for about 10-20 billion of US Dollars are expected to be landed into Pakistan via Roshan Digital Account which means that Pakistan would be able to raise higher domestic forex inflows which could help management the repayment pressure of existing borrowings.

– Sanie Mehmood Khan

Syed Zaki Hussain

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