During March 2022, Pakistan received a total of US$2.8 billion of inflows under workers’ remittances. During the month under review the remittances increased by 28.3%MoM and 3.2%YoY.
This is the highest ever monthly level for workers’ remittances. A point worth noting is that the remittances have continued their unprecedented run and remained above US$2 billion since June 2020.
Cumulatively during first nine months of the current financial total remittances received recorded at US$ 23.0 billion, posting a growth of 7.1% as compared to the same period of the last year.
Remittances inflows during March 2022 mainly originated from Saudi Arabia (US$678 million), United Arab Emirates (US$515 million), United Kingdom (US$401 million) and United States of America (US$300 million).
According to the analysts there is a larger influx of funds into Pakistan prior to the commencement of month of Ramazan and Hajj season. A lot of Pakistanis and their families visit Pakistan to celebrate Eidul Fitr and Eidul Azha with their relatives.
Over the years the concerted efforts of the Government of Pakistan, State Bank of Pakistan, commercial banks and exchange companies have played a key role in using the formal banking system the remittance of funds. However, a lot more has to be done to ensure funds transfer with the click of a few keys of the computer or the mobile phone.
First and the foremost the credit of this colossal increase in remittances goes to the overseas Pakistanis. According to an analyst Pakistanis working in the harsh climate of Saudi Arabia and United Arab Emirates collectively contribute the largest percentage. After the COVID pandemic and imposition of certain taxes on maintaining the families, many of the Pakistani citizens are living there alone. Therefore, they send higher amounts to their families living in Pakistan.
It is believed that bulk of the remittances originating from the United Kingdom and the United States pertains to highly educated professionals from Pakistan. A point to be noted is that when professional started moving to these two high developed countries, many Pakistanis opposed their decision, on the fears of brain drain. However, they became torchbearer for the younger generation and now have become a source of funds their near and dear still living in Pakistan.
The use of the formal banking system is on the rise because of technology deployment by the banks. During the October-December 2021 quarter, customers’ inclination towards use of e-banking continued as it rose to 10.7% in volume and 22.8% in value of transactions on QoQ basis. E-banking includes transactions conducted via electronic channels including real-time online Branches, ATMs, mobile banking, internet banking, call center banking, POS and e-Commerce.
It is pertinent to note that the growth in e-banking transactions is much steeper relative to paper based transactions, albeit the value of transactions is higher in the case of later. The volume and value of paper based transactions increased by 3.4% and 12.2% respectively. The volume of e-banking transactions is almost four times higher at 400 million than paper based transactions at around 101 million.
The value of transactions of the former stands at Rs33.4 trillion compared with Rs41.6 trillion paper based transactions. The growth in e-banking includes expansion in both mobile and internet banking with a double-digit increase in value and volume of transactions during the second quarter.
The number of mobile banking transactions amounted to 94 million, while the value reached Rs2.2 trillion, which comes to 18.8% and 35.4% growth respectively on QoQ basis. Meanwhile, number of mobile banking users grew by 5% on QoQ basis, reaching a total of 11.9 million users.
The internet banking users reached 6.9 million, conducting 33.8 million transactions, amounting to Rs2.4 trillion, which translate to a strong 13.9% progress in terms of volume and 28% increase in the value of these transactions compared to preceding quarter.
Retail sector also continued its upswing in adoption of digital payments. During the quarter, a total of 31.4 million transactions amounting to Rs178.1 billion were processed via 92,153 Point of Sale (POS) terminals. This shows an impressive double-digit QoQ growth of 11.8% by volume and 32.1% by value.
Similarly, the number of e-Commerce merchants also increased by 32.6% reaching a total of 3,968. On boarding of QR merchants largely added to this growth. These merchants processed 13.6 million transactions worth Rs26.7 billion, showing QoQ growth of 7.2% by volume and 19.8% by value.
At end-December 2022, there were 5.4% more cards than the preceding quarter, reaching 48.6 million cards in circulation which mainly comprised of Debit Cards (63.5%), Social Welfare Cards (22.8%), ATM only Cards (9.9%), Credit Cards (3.6%), and Prepaid Cards (0.3%).
During this quarter, paper based transactions showed relatively slower growth of 3.4% in volume and 12.2% in value on QoQ basis. In Large-value (wholesale) payments segment, SBP’s Real-time Inter-Bank Settlement Mechanism (PRISM) processed a total of 1.1 million transactions amounting to Rs161.3 trillion, showing QoQ growth of 5.9% in volume and 1.4% in value.