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The multivalent Raast Programme

The multivalent Raast Programme

Pakistan banking sector making progress

The State Bank of Pakistan (SBP) has greatly contributed for the development of the economy of Pakistan by playing vital role in the management of financial systems of Pakistan.

Experts identified that banking sector has been in the driving seat in present era. It is posting well growth in profits on the strength of its deposit profile that favours consumerism instead of savings. Statistics showed that the banking sector spread for the month of January 2022 grew by 18 basis points (bps) over the month which brings its latest value to 4.26 percent as against to the prior month’s spread of 4.08 percent. However, compared to the corresponding month last year, the spread has reduced by 11bps as it reached at 4.37 percent in January 2021. As per data, the lending rate for all banks jumped by 65bps MoM and 139bps YoY to stand at 9.34 percent. Meanwhile, the deposit rate clocked in at 5.08 percent, enhanced by 47bps over the month and 150bps over the year in January 2022. In addition, fresh lending rates reached at 10.78 percent during the month under review, up by 111bps MoM and 294bps YoY, while fresh deposit rates grew by 55bps MoM and 328bps to 6.34 percent. Thus, statistics showed that fresh banking spread during January 2022 reached at 4.44 percent, depicting a growth of 56bps MoM. While compared to the same month last year, it fell by 34bps.

In Pakistan sources registered that banking spread is much higher than banks in India, because Indians are willing to tie up their savings for some period, while Pakistanis prefer immediate encashment of their deposits. The saving rates in our country are lower due to higher consumptive deposits. Indian long-term deposits facilitate their banks to finance long-term industrial projects. The long-term projects are financed in Pakistan through foreign loans while deposit profile of Indian reveals that hardly 30 percent of their deposits are in current or normal saving accounts.

Banking in Pakistan is different from banking in other countries where banks come up with products to attract long-term deposits. Long-term deposits are a sign of stability in the banking system. The service charges of the banks have also increased abnormally. For years banks were providing ATM receipt to depositors free of charge. Now they are charging Rs2.5 whenever the customer demands a receipt. The ATM charges if a transaction is conducted from another bank have been increased from Rs15 to Rs17.

Industry experts analyzed that banks are now completely aware that due to fintech platforms like PayPal, Apple Pay, and Google Pay etc, ‘pay’ has emerged as an alternative to, say, credit card payments or direct deposits. These payment vehicles have not yet affected Pakistani banks, otherwise they will start reducing their service charges to keep the customers. They will soon be confronted with fintech products and then strive to retain the consumers to traditional but revamped banks.

Furthermore, mobile devices are being increasingly utilized in the country for payment services. The apps developed through experts are easy to use even by the least educated population. The mobile devices are not a substitute, but an enhancement of the payment process. It acts as a facilitation for the population that has no access to banks.

Great initiative

Presently the State Bank of Pakistan (SBP) has taken the great initiative to launch a fast digital transaction platform for the first time in the history of our country. It is for the remittance and money transfer transaction and will assist common men, businesses, and government agencies. Named, Raast, the system will be source of saving time and money for financial systems like banks and microfinance institutions. After its success in the business and investment sector in 2021, now access has been opened for common man.

Prime Minister Imran Khan proudly introduced this instant person-to-person payment method in Islamabad. Sources recorded that technology these days is the way to enhance saving tax rates and tax to GDP ratio. Hence, Pakistan’s economy will enhance and this new attempts through SBP will lead Pakistan towards more accomplishments and advancements. It is said that if the Government of Pakistan succeeds in running this system professionally, it will be a milestone in the alleviation and irradiation of poverty from Pakistan. It is also said that the Raast system is for low cost digital marketing and online money transfer. This new system will assist the working sector of Pakistan to do the transactions sitting at their job places and homes through their cell phones.

It will also assist the common person who avoids the hassle of going to the banks. This new digital transaction system will help these common people to do the money transfer transaction from their own mobiles. It is also said that Raast system will not just be beneficial for the common man and working sector, but also will surely benefit the overseas Pakistanis.

The Raast system will also be used in the Federal Board of Revenue (FBR) to track the people who don’t pay taxes. Moreover, it can be affiliated with any bank account and it will bring more ease to people to do the transaction with no service charges.

Most recently, SBP was making efforts to enhance financing for maize crop in Pakistan. SBP has chosen Chunian for the launch of Electronic Warehouse Receipt Financing (EWRF) because of a phenomenal maize production in the area.

The Raast programme is a digital platform developed by SBP for remittances and transactions between citizens, businesses and government agencies. The digitally faster and easier system will facilitate the common man in accessing banking channels and electronic transactions. It has been introduced at the level of citizens for the convenience of the common man in Pakistan.

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